ESSAY ON THE 

RECONSTRUCTION 

OF MEXICO 



By 



Manuel Calero 
Francisco S. Carvajal 
Juan B. Castelazo 
Toribio Esquivel Obregón 
Jesús Flores Magón 
Tomás Macmanus 
Rafael Martínez Carrillo 
Miguel Ruelas 
Jorge Vera Estañol 



DE L A I S N E 

TWO DUANE STREET 



CARRANZA, Inc 

: : : : : ; : NEW YORK 



ESSAY ON THE 

RECONSTRUCTION 

OF MEXICO 



By 

Manuel Calero 
Francisco S. Carvajal 
Juan B. Castelazo 
Toribio Esquivel Obregón 
Jesús Flores Magón 
Tomás Macmanus 
Rafael Martínez Carrillo 
Miguel Ruelas 
Jorge Vera Estañol 



DE LAISNE €r CARRANZA, Inc. 

TWO DUANE STREET : : : : ; : NEW YORK 



DOCUMENTS ^•;.3,ON 






~é- 



é 



Translated by 
H. N. BRANCH 

Translator of the Mexican Constitution of 1917, etc. 



Digitized by the Internet Archive 
in 2010 with funding from 
The Library of Congress 



http://www.archive.org/details/essayonreconstruOOcale 




CONTENTS 



PAGES 

Foreword to the English edition 7 

To our Fellow Citizens 9 

I. Measures suitable to make democracy effective in Mexico IS 

Recommendations _ 18 

II. Checks and balances of the branches of Government. Impeachment 

of Officials. Methods of substituting the President 21 

Recommendations 24 

III. Foreign Affairs 27 

Recommendations _ 28 

IV. The Naturalization and Civil Status of Aliens 31 

Recommendations 34 

V. Municipal Autonomy 35 

Recommendations 37 

VI. Education 39 

Recommendations 41 

VII. Administration of Justice 43 

Recommendations 45 

VIII. Railroad Policy 47 

Recommendations 49 

IX. National Army 51 

Recommendations 54 

X. Labor Legislation 57 

Recommendations _ ._ 59 

XL Responsibilities Growing out of Disorders in Mexico 61 

Recommendations 63 

XII. Public Health 65 

Recommendations 67 

XIII. Development of our National Resources. 69 

Recommendations 77 

XIV. Economic and Financial Problems 81 

Recommendations 93 

XV. The Agricultural Problem 97 

Recommendations 105 



FOREWORD TO THE ENGLISH EDITION 



rWlHE ESSAY here presented to the English-speaking community embodies 
t . a message from certain Mexican citizens to the Mexican people as a whole. 
-*■ For this reason, although originally published in the United States, it was 
written and printed in Spanish. Since its appearance, however, the press notices 
it has received have led to requests from many sources for an English version. 
Accordingly, the authors determined to issue the present edition. 

This exposition, summary as it is, gives an idea of the problems with 
which the Mexican people must contend in any attempt at the rehabilitation of 
their country. The authors do not pretend to have embraced all of these problems, 
but they do sincerely believe that those discussed are the most pressing and 
important. 

The Essay was written during the provisional government preceding that of 
General Obregón. Therefore, when the authors refer to the "present government 
of Mexico " or use a like expression, they refer to the government of provisional 
President de la Huerta. The problems that existed during the latter's administra- 
tion are, however, the same as those with which President Obregón's government 
is confronted, though in many respects they now assume an even graver aspect. 

The names of the collaborators are arranged alphabetically, in accordance with 
the rules of arrangement of names in Spanish. It is believed that a brief statement 
of the professions and of the more important public offices formerly held by the 
authors in Mexico may be of some interest to the American reader... The follow- 
ing enumeration covers this point: — 



Manuel Calero. — Lawyer, Member of the Chamber of Deputies, 

Senator, Secretary of Justice, Secretary of Foreign Affairs, 

Ambassador to the United States. 
Francisco S. Carvajal. — Lawyer, Senator, Chief Justice of the Federal 

Supreme Court, Provisional President of the Republic. 
Juan B. Castelazo. — Lawyer, Governor of the State of Guanajuato, 

Mexican Consul General in France. 
Toribio Esquivel Obregón. — Lawyer, Secretary of the Treasury. 
Jesús Flores Magón. — Lawyer, Senator, Assistant Secretary of Justice, 

Secretary of Gobernación. 
Tomás Macmanus. — Banker, Member of the Chamber of Deputies, 

Senator. 
Rafael Martínez Carrillo. — Lawyer, Senator, Assistant Secretary 

of Gobernación. 
Miguel Ruelas. — General of Brigade in the former Regular Army, 

Director General of Military Education, Second Assistant Secretary 

of War. 
Jorge Vera Estañol. — Lawyer, Member of the Chamber of Deputies, 

Secretary of Public Instruction. 



TO OUR FELLOW-CITIZENS 



FOR MANY long years, through the bitterness oj the partisan 
governments dominating Mexico, those who sign this document 
have been com^pelled to live in exile, deprived of the rights of 
citizenship and even of the civil rights which the laws of Mexico ac- 
cord to aliens; but as no government could rob us of our love for the 
land that gave us birth, nor destroy in us the consciousness of our duty 
toward our country, we determined to unite our efforts with a view to 
examine the fundamrcntal problems of the Mexican situation and to 
offer to our fellow-citizens the result of our study. If we can thereby 
contribute, in some degree, to alleviate the domestic distress of our 
country and to avert the international dangers which threaten her 
sovereignty, we shall be amply paid. 

The essay on the reconstruction of Mexico now made public was 
drafted, in its essential points, during the last months of the Carranza 
administration. The recent change in the personnel of the government 
is no reason why we should desist from our task; rather are we of the 
opinion that the present moment is even more propitious to our dis- 
interested efforts. However small our experience in public matters, 
the program we submit has, in the first place, the advantage of being 
inspired in a spirit of compromise between the teachings of pure theory 
on which our system of government is based, and the limitations and 
shortcow,ings of the Meodcan people. We have not sought to formulate 
a program of Utopian recommendations, but a series of applications of 
scientific principles to the practical realities of Mexican life. This 
means that we do not interpret politics as a science discovering and 
formulating laws, ' but as the very difficult art which, with due regard 
for such laws, studies national forces and the method of harmonizing 
them, so that, instead of destroying one another in perpetual conflict, 
they may be combined and cooperate to the advancement of the Nation. 

Nor is it a revolutionary plan that we have written, false panacea 
to which the disgruntled and the ambitious ever resort in Mexico. We 
deem our work a program of national salvation. Withdrawn as we are 
from active political life and without the possibility of intervening there- 
in, and living outside the country, we address those who can translate 



— 10 — 

our lúeas into deeds, ij after careful study they find them satisfactory 
and practicable. 

We are not unaware of the fact that the faith of some of our fellow- 
men in the capacity of the Mexicans to redeem themselves by their 
own efforts is beginning to fail and falter; nor are we oblivious of the 
existence among foreigners of the belief that, without outside aid, we 
cannot be saved. We still have faith in the virtues of the Mexican 
people, and believe that if their activities are guided along the proper 
path, they can, alone, set up a regime of law which shall be a sure 
guarantee of progress and a firm foundation upon which to reconquer 
the respect of the ivorld. 

Those of our fellow-citizens who are familiar with our antecedents 
will see how ive have begun by sacrificing our former political differences 
to the exigency of national interests. Some of us, moved by the same 
lofty purpose, have also sacrificed favorite theories sustained in public 
office, or defended in the press and in the forum. All of these sacrifices, 
which possibly expose those making them to the charge of inconstancy, 
are imperative requirements of the purpose animating us. Today we 
are united, and our efforts are combined under the guidance of a 
superior and sacred aspiration, compelling our gaze only to the future 
with no time to glance backward to the dismal days of the past, unless 
it be to draw from them the lessons of experience, and so justify our 
present position. 

Before submitting the various portions of the program which, in 
our judgment, the Mexican Government should follow in laboring for 
the reconstruction of Mexico, we must set down as a fundamental 
observation that neither the most conscientious surveys nor the wisest 
laws can solve our social problems, unless the work be done on the 
solid foundation of the integrity of those in authority. Without this, 
every effort would be futile. 

If now we consider the method followed in our work, we must state 
that we regard it as essential, at the outset, in considering the re- 
construction of Mexico, to fix its general lines, and the end which 
Mexican statesmen ought to have in view. Many disinterested and 
intelligent efforts have been wasted through a lack of method; and the 
policy of our government has been at the mercy of the capricious 
influence of individuals or of the exigencies of each new day. 

In dealing with the problem of reconstruction, it would be a vital 
error to regard Mexico as an industrial country. Its present stage of 



— 11 — 

development is not the industrial stage. Nor is it our judgment that 
preference should be paid to the mining industry, despite the prominence 
that this branch of economic activity has attained in Mexico. What 
is of capital importance, quite fundamental in fact, — and this seems 
to us axiomatic, — is to guarantee an adequate and nourishing food- 
supply for the people. Mexico is an agricidtural country, capable of 
great agricultural development; and yet, by a lamentable paradox, its 
population is inadequately fed, because the soil does not yield enough 
for their sustenance. This condition reveals the existence of an 
economic-social problem of grave character, which points the way to 
the principle that must be paramount in any program of reconstruc- 
tion; only by frankly recognizing it, can we hope to have a national 
economic policy, a regime of our own, drawn from our oiün experience 
and adapted to the essential conditions of our own life. 

From the strictly political point of view, we believe that a pre- 
requisite to the carrying out of a program of national reconstruction 
is the restoration of the constitution of i8jy. Apart from its historic 
value and its intrinsic merits {broad and great enought to guarantee 
the most progressive program), the constitution of i8jy has the supreme 
virtue of having been recognized by the whole people as the national 
constitution. Its restoration as the supreme law of Mexico ivould 
eliminate the protests now made, and which will continue to be made 
throughout the republic, against the imposition of the constitution of 
191 7 by the Carranza revolutionists, in violation of their most solemn 
pledges. 

Neverthless, the constitution of 1857 is not an immutable law; 
nor do we believe that all its precepts respond to the admitted" demands 
of progressive thought. Experience has shown the expediency, — the 
urgency we might say, — of introducing several amendments ; but in 
order that they may have the same sanctity as the constitution itself, 
they should be effected by constitutional means, that is to say, 
through the action of the federal congress and a majority of the state 
legislatures. Any other process is to be rejected as illegal — no less 
illegal than the meeting of the so-called Constitutional Convention 
which f rammed the constitution of 191 7. 

A return to constitutional order, to a status of legality accepted 
by all {even by those who have sought to subvert it), would amount 
to the elimination of the first cause of discord among the Mexican people. 
The men who are today in control in Mexico should convince tliem- 



— 12 — 

selves that respect for legal traditiuji is the most poiverjul tie in 
maintaining the cohesion oj a social group that is not yet definitely 
integrated. 

In recommending the restoration oj the constitution oj iS^y, ive 
do not mean that the present Mexican Government should be over- 
thrown through a jresh revolution. Should the governmefit itselj find 
the means oj realizing this salutary measure, the main purpose we seek 
would be attained. We are indifferent as to the method chosen to 
restore the, legitimate constitution, inasmuch as there is no law to 
prescribe it or even point the way; but we shall condemn the use oj 
jorce, so long as there exist other means to attain the desired end. 

Much capital has been made oj the statement that the constitution 
oj igij m-arks a great step jorward jor the .Mexican people, with the 
corollary implication that the restoration oj the constitution oj 1857 
would be a step backward, a reactionary step. This concept is jalse, 
as we shall readily show in the course oj this study. Nay more; taken 
in its entirety the constitution oj igiy is less liberal than that oj 1857, 
while certain oj its precepts embody the most intolerable tyranny, and 
even the subversion oj principles essential to any regime oj democratic 
jreedom. 

In support oj this statement, we may point to the jact that the 
constitution oj 191 7 sanctions, as a legal institution, the dictatorship 
oj the executive branch by making the President virtually non-impeach- 
able, and by reducing the sessions oj Congress to barely jour months 
a year. During this term, Congress must devote its attention prejerably 
to the enactmefit oj tax measures, to passing the budget and to auditing 
the accounts oj the executive branch. Such a task leaves Congress no 
jreedom oj action, unless to the prejudice oj these jundamental duties. 
On the expiration oj these jour months, Congress cannot junction unless 
called into extraordinary session by the President, iphen its legislative 
sphere is limited to the matters specified in the call. A congress thus 
shackled cannot represent a jree people. 

Again, while the constitution oj 1857 guarantees jidl religious jree- 
dom, that oj 191 7 persecutes all creeds and all religion. No one would 
dare to say that this jorm. oj tyranny over the conscience is an achieve- 
ment in the path oj liberty. 

So, too, the constitution oj 1917 mutilates the democratic principle 
oj the liberty oj education, which is jully guaranteed by that oj 1857. 

It has been said that Article 27 oj the new constitution, which 



— 13 — 



undermines the right of property, is an achievement. We can neither 
endorse this theory, nor close our eyes to the palpable fact that the 
application of this article has only served to work extortion, without 
bettering the condition of the masses who continue sunk in age-long 
squalor and poverty. 

We shall point out, in the course of our study, other innovations 
of the constitution of 1917, which constitute lamentable retrogression, 
as lúe shall, with no less impartiality, note in what respects the later 
instrument excels that of 1857. Were we to admit, however, that the 
new code is as a document superior to the former constitution, not 
even then would we declare ourselves in favor of it, for we cannot fail 
to take into account the fact that our people, like all peoples, is subject 
to historical and social forces of the sort which no statesman can afford 
to overlook if his work is to endure. One of these forces is that of 
Law, which builds the framework of the political structure of a people 
throughout its history. Until such time as a social convulsion shall 
break this framework, — as the French Revolution shattered that of 
an older order, — it must be preserved, if for no other reason than to 
prevent the establishment of the fatal precedent, which seemed to have 
been forgotten in Mexico, that every change of rulers can bring a new 
constitution, thereby sowing ineradicable seeds of discord. The only 
thing that the revolutionists might properly have done was the modifica- 
tion of those provisions of the constitution of 1857 i^hich they deemed 
incompatible with the doctrines or pet theories of their revolution. Had 
they thus proceeded, they would have satisfied their program of in- 
novations, without wounding public sentiment, nor furnishing fuel for 
future revolts, which will at any moment have the same justification 
as the movement initiated by the Plan of Guadalupe, namely, the 
restoration of the constitution. 

What force can be given to the constitution enacted at Queretaro 
by the provision of its Article 136 which prescribes that the very same 
constitution shall not lose its force and vigor even though its observance 
be interrupted by rebellion? An identical provision exists in Article 128 
of the constitution of 1857. Yet this did not prevent Señor Carranza 
and his partisans from supplanting by another the very constitution 
for whose restoration they were fighting. By this attack on the legal 
principle that the constitution is one and insubvertible, although sub- 
ject to amendment, those who called themselves "constitutionalists" 
in advance made impossible any efficacy in their own constitution and 



— 14 — 

destroyed all the force oj the precept oj its Article 136 which they 
themselves had jailed to respect. 

In a word, we doubt the effectiveness of any constructive labor in 
Mexico without the vindication of the principle of legality, the only 
memis of averting the anarchical tendencies of those who dream 0^ 
attaining the triumph of social justice by the destruction of society 
itself. Legality, represented hy a constitution historically sanctioned 
and 'wholly identified with our justly-earned glories, will be the sole 
beacon to the Mexican people in the midst of the storm of passions 
and conflicting principles 'which now engulfs the world. The constitu- 
tion of 1&57 opens the doors to social progress in every respect, and is 
susceptible to far-reaching amendment, which would insure real pro- 
gress for the people, as we hope to show in the course of this study. 

Having stated our purposes, we shall proceed to analyze them in 
the chapters of the folloiving program. 

New York City, September, 1Q20. 



MEASURES SUITABLE TO MAKE DEMOCRACY 
EFFECTIVE IN ME?CICO 

IT IS NOT to be gainsaid that with all the disastrous effects 
of the convulsions that have shaken Mexico for the last ten 
years, certain results quite beneficial to our political advance- 
ment have been attained. Among others, we must not overlook 
the full realization by the people of the fundamental concept 
of sovereignty in a democratic government. Civic duties, which 
for so many years had seemed dead or forgotten, are taking 
root more and more in the public mind; and the people have 
begun to realize, as the fruit of bitter experience, that only by 
the unflinching fulfillment of those duties which a democracy 
imposes on each citizen, can the Republic be freed from tyrannies 
which degrade, or anarchical convulsions which destroy. 

Nevertheless, we are far from priding ourselves upon the 
establishment of democracy in Mexico; and we would be guilty 
of lack of sincerity if we were to say that the government that 
brought about the so-called constitutionalist revolution was a 
regime where liberty and justice ruled, in other words, a demo- 
cratic government. Had this been the case, we should never have 
thought of offering, from exile, our feeble contribution to rescue 
the Republic from the terrible dilemma to which the Carranza 
Government was dragging it: disintegration in a whirl of disorder 
and immorality, or a collapse into foreign hands which, at the cost 
of our sovereignty, would redeem us from our own helplessness. 

And yet, it is with a feeling of sadness, that we record the 
fact that the disappearance of the Carranza administration has 
not made, as if by magic gesture, a radical and definitive change 
in the government of Mexico. However much of an effort may 
be made to prove that the revolution which overturned Carranza 
was inspired by lofty and legitimate purposes, and the motives 
of those who seized the reins of gQvernment disinterested, — and 
we admit this fact without qualification, as to certain of its 
members, — there is still a formidable barrier to the un- 
encumbered progress of our political development, which is 
not surmounted by the mere substitution of a new governmental 



— 16 — 

personnel, even though the new men are animated by a genuine 
intention to respect popular liberties. This obstacle is the 
appalling illiteracy of four-fifths of the Mexican people. 

A people whose vast majority is wholly illiterate, a people 
which does not read because it cannot read, a people in part 
consisting of groups speaking only their native tongues, is not 
the demos that a system of popular government requires and, 
indeed, takes for granted. This situation is not peculiar to 
Mexico; it occurs throughout the nations of Spanish America in 
which the classical despotisms of the American continent have 
flourished. By the side of a substantial group, well qualified to 
comply with the obligations imposed by democracy, there are 
in Mexico twelve million human beings in the lamentable state 
of backwardness we have just described. Our professional 
politicians lack the necessary moral courage to admit that these 
twelve millions must be transformed by education before they 
can be called upon to exercise their civic duties, and choose 
rather to endorse the conventional allegation that all Mexicans 
are fitted for self-government. This attitude should be attributed 
not so much to a fanatic regard for the democratic principle of 
universal political equality, but to a desire to flatter the masses 
by references to their rights, and then use them to furnish the 
brute force with which the government can be seized by violence, 
and retained by terrorism. 

The "constitutionalist" revolution, like every other revolu- 
tion in Mexico, promised us the reign of liberty; but the Carranza 
regime fell far short of fulfilling its promises of liberty, even 
though it could not wholly stay the political progress of the 
Mexican people. We should say on its behalf that no govern- 
ment, however well disposed, can fulfil such promises in Mexico, 
so long as the people do not do their part. When governments 
in Mexico respect liberty, it takes on the form of anarchy under 
the influence exercised over the masses by nefarious agitators; 
and then the governments, facing the danger that society may 
be engulfed by anarchy, restrain liberty, and finally fall into 
the opposite extreme — despotism. If democracy, with universal 
suffrage, were practicable in Mexico, the movement that over- 
threw Carranza would have had no possible justification. Ca- 
rranza sought to impose his will regarding the election of his 
successor in the chief magistracy. Could he have achieved 
this end, if the people fully grasped the significance of their 
political rights? What fear could the other presidential candi- 



— 17 



dates have entertained, if the people were really to decide the 
election by their ballots? In countries where the people act 
through the force of public opinion and the ballot, — and these 
are always the countries in which illiterate citizens form an insignificant 
minority, — it is unnecessary to appeal to violence to prevent 
electoral impositions. The mere mention of such fraud in these 
circumstances is a paradox. In any event, the people protest of 
their own accord, and do not need nor tolerate that the army 
should become the interpreter of its will. The Republic of the 
United States has never known an instance where the army, in 
defense of popular rights which have been violated, has over- 
thrown a government and set up another in its place. In Hispano- 
America, with two or three relatively recent exceptions, the 
army makes and unmakes governments, and the popular vote 
merely serves to ratify the violent acts of military chiefs. 

We are ready to admit that the last movement in Mexico 
was in part provoked by Carranza himself in illegally persecuting 
the most conspicuous among the presidential candidates; but 
were the people the decisive factor in electoral contests, neither 
would Carranza have dared to engage in this persecution, nor 
would the persecuted candidate have witnessed the practical 
wholesale defection of the army to his cause. Pretorian armies 
exist only in those countries where liberty is not held by the 
people as a precious and inviolable patrimony. 

The only excuse, the sole plausible explanation that can 
be given to the latest political movement in Mexico, is that which 
its initiators and beneficiaries do not dare to state, namely, that 
the great mass of citizens, by reason of their own impotence, 
were obliged to remain inactive while others officiously defended 
their possession of the fundamental civic rights which Carranza 
sought to violate. When a people is in such a case, democracy 
becomes a fiction and cannot be said to exist. 

We are convinced that those Who attain power under the role 
of "champions of the people's rights" cannot honestly admit 
our true condition. The adult illiterate must be educated, or at 
least afforded every facility to rise from his abject condition; 
the Indian who can only speak his vernacular tongue most be 
taught to speak, read and write the national language — Spanish. 
Until these results are attained, the illiterate should be kept in 
a state of political minority, which will automatically end the 
day that he acquires that elementary knowledge which the law 
should demand for the exercise of civic rights. The government, 



— 18 — 

on the one hand, the cultured classes, on the other, and, in 
general, all citizens who love their country and are interested in 
its progress, should leave no stone unturned to efface, as rapidly 
as possible, the widespread stain of illiteracy. One of the 
chapters of the present program is devoted to this subject. 
Considering the c]uestion now solely from the political point of 
view, we hold that the most radical measure, the most progres- 
sive and the most democratic, that a party seriously engaged in 
the reconstruction of Mexico can adopt is to restrict the ballot 
to those who, in fact, know how to use it. 

Although at the moment ot decisive action our politicians 
show their profound distrust of the people, — we have indicated 
that the overthrow of the Carranza Government was a mani- 
festation of this distrust, — they do not, however, seem resolved 
to abandon the false theory that it is a duty to render homage 
to ignorance and incompetency. It is common knowledge that 
the section of the electorate which may be regarded as qualified 
to vote abstains from doing so because they know that their bal- 
lots are overwhelmed by the mass of votes of the illiterate; and it 
is common knowledge, too, that these are cast recklessly and 
irresponsibly, or manipulated by unscrupulous politicians. We 
thus deprive the population of its best elements, as well as its 
fittest directors, and we stifle civic spirit in the very groups 
which ought to be the bulwark of our institutions. Consequently, 
the caste of "champions of the people's rights" will continue to 
flourish among us. 

The government in Mexico which is to follow the present 
provisional government should seek a basis of support more in 
keeping with the facts and with the true condition of our 
democratic elements. If it fail to do so, it will have 1o be 
satisfied with living a precarious existence, until it is in turn 
overthrown by future defenders of the rights of the people. 
The work of reconstruction in Mexico will thus be subject to 
the hazards of fresh upheavals. 

Our views on the subject matter of this chapter may be 
summarized as follows: 

Bearing in mind thai the Mexican people has now begun to take 
the first step in the exercise of self-government, by electing, although 
imperfectly, its magistrates and by exercising the correlative rights 
of petition, assembly, organization for political purposes, and of free- 
dom of speech and the press, we believe that it is a paramount duty 
of each administration to guarantee the exercise of these rights, to 



— 19. — 

see that popular liberties are exercised in a peaceful and orderly 
manner, and that the laws regulating the exercise of political rights 
are fitted to the condition of our people, in order to assure the 
effectiveness and sanctity of the ballot. 

We therefore deem it indispensable that, in federal and state 
elections, the ballot be exercised only by Mexican citizens of more 
than twenty.one years of age, of honest means of livelihood and able 
to read and write the Spanish language. 

This last condition is not to be required in municipal elections in 
the case of persons occupied in an industry or trade as defined by 
law, or owning real state within the respective municipal area. * 



* Note to the English Edition. — We have heard the opinion ex- 
pressed that our recommendation with respect to limiting suffrage in Mexico 
may be regarded by the American reader as an undemocratic measure. We are 
satisfied, however, that no American conversant with our social conditions would 
regard this recommendation other than as a step toward the establishment of 
true democracy in Mexico. Only those whose pohtical knowledge is confined 
to the boundaries of the United States and who for that reason believe that 
pohtical standards prevaiHng in this country are applicable to countries of 
entirely different social and economic structure, will condemn our attitude. 
Such condemnation must, of necessity, lack weight. 

To us a century seems long enough to experiment with a system of govern- 
ment. During one hundred years Mexico, like other Spanish-American countries, 
has experimented with democracy on a basis of unrestricted qualification for 
the voter; and the result has been a continued failure. Are we not entitled to 
try another system more in harmony with the scientific principles of the govern- 
ment of a true democracy? 

With only two exceptions, revolutions in Mexico have not been revolutions 
m the social and historical sense; they have been the bloody, nay, demoralizing 
and destructive form in which the personnel in power has been replaced The 
ballot is used only to ratify and endorse the result of an act of violence This 
happened with Gen. Porfirio Díaz; similar was the procedure adopted by Madero- 
Carranza followed the same path; and Gen. Obregón was forced to resort to th¡ 
same method. 

This experience is more than enough to prove that democracy in Mexico 
has not been achieved through universal suffrage. Eighty per cent of the citizens 
entitled to vote are illiterate. Half of this number are Indians of whom a 
considerable proportion do not even know Spanish. While in the United States 
out of every one hundred electors only eight are illiterate, out of one hundred 
Mexican electors more than eighty are illiterate. 

Nor is illiteracy the only scourge of our democracy. There is also the 
misery prevalent among the great majority of our people. Had we but spent 
m schools and in uplifting the masses sunken in poverty the countless millions 
we have wasted in unwholesome political strife! Instead, politicians and müitary 
leaders, while proclaiming the rights of the masses, have brutally used them as 
cannon fodder, as the element of force to ruin the country in their mad struggles 
for power. 

Our five million iUiterate Indians, so long as they remain illiterate will be 



— 20 — 

incapable of understanding political issues. Democracy has succeeded only where 
the electorate has been intelligent and sufficiently cultured to understand the 
issues. 

The accuracy of this principle has been appreciated by the American people 
in several instances. We refer to the policy employed in handling the American 
Indian problem and the situations in Hawaii, the Philippine Islands and Porto 
Rico. The American people have seen fit to keep under the Nation's guardian- 
ship, without any political rights, a few hundred thousand individuals of Indian 
race inhabiting the United Stales. And yet the number of these Indians is 
insignificant, in absolute and relative terms, compared to the number of Mexican 
Indians, and could not, by reason of its insignificance, jeopardize American demo- 
cratic institutions. In Hawaii, the Philippines and in Porto Rico the first thing 
the American people did in laying the foundations of democratic government 
was to establish, as a qualification for the voter, the ability to read and write. 
Why, then, should a similar system be regarded as undemocratic in Mexico? 

It goes without saying that in depicting our political backwardness, we do 
not speak in derision of our people, of whom we form a part and whom we 
love. We talk as men who honestly state facts. Such a condition does not 
signify a reflection, for even the most advanced peoples have had to pass through 
it in their social evolution. 

The Authors 



II 

CHECKS AND BALANCES OF THE BRANCHES OF GOVERNMENT. 

IMPEACHMENT OF OFFICIALS. 

METHODS OF SUBSTITUTING THE PRESIDENT. 

THE PROVISIONS of the constitution drafted at Querétaro 
relating to tfie function of the powers of government are 
substantially those of the constitution of 1857. The former 
instrument, however, contains certain innovations which we 
think helpful, and tending to secure harmony between the 
branches of government, without leading to any diminution of 
the liberties of the people. We shall note these innovations in 
the course of this chapter. 

The constitution of the United States established what is 
known as the "veto", that is to say, the power of the president 
to return to Congress bills enacted by it which, in his judgment, 
should not be approved as being contrary to the public interest 
or to the constitution, or for any other sufficient reason. Should 
Congress vote by a two-thirds majority to override the veto, 
the bill becomes a law. 

This concept has been followed in the main by the Que- 
rétaro constitution. It involves a considerable advance over the 
constitution of 1857 which established the omnipotence of 
Congress at the expense of the other branches of government. 
We do not hesitate, therefore, in recommending this innovation, 
into an academic discussion of which we shall not embark as 
being beyond the scope of this document. But the framers of 
the constitution of 1917, inspired by a reactionary tendency, 
set themselves out to limit the purely legislative function of 
Congress. To this end, they reduced the annual sessions to a 
single term of four months, while they left to the sovereign will 
of the President the power to summon Congress into extra- 
ordinary session, at which time, however, it might only deal 
with such matters as were expressly enumerated in the call. 

We condemn this system, not only as anti-democratic, but 
because it prevents Congress from carrying out its inherent 
function. The four months of the regular session would probably 
suffice for an examination of the governmental expenditures for 



— 22 — 



the preceding year, and for passing the budget and revenue 
bills; but if Congress earnestly sets itself to this task it will 
not have time for other matters not fiscal in character. In 
order to avoid this difficulty, the Carranza congress resorted 
to the old system of conferring legislative functions upon the 
Executive — an odious form of dictatorship, which those who 
had undertaken a revolution to sweep away a dictatorship and 
safeguard popular rights did not hesitate to endorse! 

A return should be made to the system embodied in the 
constitution of 1857. With a Congress elected by the ballots 
of Mexican citizens who realize the importance of the electoral 
function, we may count upon a legislative branch qualified for 
the performance of its natural duties, and which need not be 
muzzled as the Querétaro constitution seeks to do. The debates 
of a free Congress, chosen by a competent electorate, would be 
a factor of prime importance in creating public opinion on 
affairs of national interest and in awakening in the people a 
civic spirit. 

The constitution of Querétaro likewise changes the precepts 
of the 1857 document as to the impeachment of the President 
and other high federal officials. It seems needless for us to 
condemn here as dangerous and contrary to the fundamental 
precepts of our own institutions the method established by the 
constitution of 1857, whereby a mere majority of the Chamber 
of Deputies might depose an official, including the President of 
the Republic. The existence of this power in the Congress has 
contributed in no small degree to the use by various presidents 
of legal and illegal means to command a favorable majority in 
the House, in the interest of their own safety and in that of 
the government itself. But the Querétaro constitution goes much 
farther than what democratic principles recognize, in making 
the President unimpeachable, so that, like the monarchs of divine 
right who could do no wrong, he may violate the constitution and 
infringe electoral liberty with impunity. This is nothing more 
nor less than the consecration of dictatorship as a legal institu- 
tion. The Querétaro constitution only permits the impeachment 
of the President in the exceptional cases in which he commits 
grave offenses of the common order or high treason. 

We, accordingly, recommend the maintenance of the pro- 
vision of the constitution of 1857 which provides that the 
President may be impeached for express violation of the consti- 
tution and for attacks on electoral liberty. Nevertheless, we are 



— 23 — 

of the opinion that those portions of the Querétaro constitution 
which aim to protect pfficials against the passions that are so 
easily aroused in a body of the organization and character of a 
popular assembly, and which are based on the constitution of the 
United States, should be followed in the main lines. 

The constitution of 1857 makes of the Senate the tribunal 
to impose sentence in cases of official offenses. This gives the 
federal courts, should the occasion arise, the power to review 
the rulings of the Senate, whenever the accused officials shall 
institute amparo proceedings on the ground of a real or alleged 
violation of individual guarantees. This may well cause serious 
conflicts between the two branches of government and facilitate 
situations favorable to coups d'état and, in general, to disorders. 
If the function of the Senate in the matter of impeachment is 
confined within strictly political limitations, the federal courts 
ought to be given no possible ground for" intervention. The 
decision handed down by the Senate as to the removal of a 
public official from office is, and should be, a sovereign and 
exclusive act, wholly political in character, involving no question 
of a violation of individual guarantees. When the functionary 
has once been removed, if the law prescribes a penalty other 
than that of removal from office, the case passes into the jurisdic- 
tion of the proper court w^hich will decide on the application 
of the penalty established by law. 

Lastly, we believe that in suppressing the vice presidency 
the Querétaro constitution introduced an innovation which, while 
hardly defensible from an academic point of view, is highly to 
be recommended in the light of the painful experience of our 
history. If through an unhealthy development of our political 
life, the Vice President is the official through whose election the 
gravest disagreements have been producd among the Mexican 
people, then the vice presidency should be suppressed. The 
Querétaro constitution entrusts to Congress the designation of 
the acting or substitute president, whenever necessary. While 
this procedure has not yet been put to the test of a practical 
application under normal and legal conditions, the failure of 
the various expedients provided in the constitution of 1857 and 
its successive amendments leads us to believe that it is prefer- 
able to adopt a system substantially identical with that laid 
down in the Querétaro constitution. We, accordingly, recommend 
that the constitution of 1857 be amended in this respect. 



— 24 — 

We may sum up as follows: 

With a view to bring about a proper balance between the 
different branches of the government and their free action within 
the respective spheres of their constitutional attributes, and to 
assure, as far as possible, the political stability of the country, 
we submit the following recommendations: 

(A) That there be definitely established the "veto", namely, 
the power of the President to return to Congress, within ten days 
and with such observations as he may see fit to make, any bill re- 
ceived for his signature, which, in his judgment, is open to objection. 
Should Congress confirm its previous action by a two-thirds vote 
of the members present, provided there is a quorum, the bill then 
becomes a law. The Executive shall not veto the resolutions of 
Congress when it acts as an electoral body or exercises the powers 
conferred upon it by the constitution in the impeachment of officials. 

(B) That Congress ought to have two annual sessions, as pro- 
vided in the constitution of 1857. It is our judgment, however, that 
it should not be the exclusive attribute of the Standing Committee 
to summon Congress or either of the legislative bodies into extra- 
ordinary sessions during the recess, but that this power should like- 
wise be vested in the President. 

(C) That only in the event of the suspension of guarantees should 
Congress invest the President with legislative powers; in such event 
it shall set the time within which they shall be exercised and the 
department of the public service to which they shall be confined. 
The grant of "extraordinary powers" to the President, — other than 
in the exceptional cases hereinbefore enumerated, — is contrary to 
the essence of democratic government and is an attack on the rights 
of the people. 

( D ) That before any high federal official, except the President, 
can be brought to trial for offenses of the common order, it will be 
necessary for the Chamber of Deputies, by a two-thirds vote at least, 
to declare that there are grounds to proceed against the accused 
official, who, in such event, shall be removed from his post and be 
subject to the jurisdiction of competent tribunals. 

(E) That pursuant to Article 103 of the constitution of 1857, the 
President may be impeached only for high treason, express violation 
of the constitution, an attack on electoral freedom, or grave offenses 
of the common order. Should the Chamber of Deputies, by a vote 
of two-thirds, decide that there are grounds to proceed against the 
President, the case shall be reviewed by the Senate. Should the 
Senate, also by a vote of at least two-thirds of its membership, 
confirm the decision of the Chamber of Deputies, the President shall 
be forthwith removed from office and be subject to the jurisdiction 
of the regular courts. 



25 — 



(F) That in the case of dereliction of official duty on the part of 
a government official, a procedure analogous to that prescribed for 
the impeachment of the President shall be followed. 

(G) That the regular courts shall be exclusively charged with the 
trial of fimctionaries of any category when accused of offenses of 
the common order or official offenses, without any other limitation 
than the findings of the Chamber of Deputies, or of the Chamber 
and of the Senate, in the cases hereinbefore presented. Accordingly, 
the jurisdiction in the criminal order conferred on the Senate by 
Article 103 of the constitution of 1857 ought to be terminated. 

(H) That the temporary or permanent disability of the President 
should be provisionally filled, by operation of law, by the Secretary 
of Foreign Affairs, and in the absence of the latter by the Secretary of 
Gobernación; but Congress shall forthwith proceed to choose an 
acting President. The secretary of department who shall have as- 
sumed the provisional presidency ought not to be eligible for the 
office of substitute president. Should Congress be in session, it 
might sit as an electoral college so soon as the disability of the 
President were to occur; if in recess it might be summoned in extra- 
ordinary session without delay by the Standing Committee. Senators 
and Deputies ought to vote individually by secret ballot. 



Ill 

FOREIGN AFFAIRS 

ANY DIPLOMACY inspired in a spirit of insincere patriotism 
and merely rhetorical is iielpless to safeguard the dignity 
of México and to avoid encroachment upon its sovereignty, as 
was seen during the Carranza administration. We trust that this 
type of diplomacy will be definitely abandoned, as also that 
which seeks to awaken international antagonisms on this con- 
tinent, with the vain and illusory hope of finding in kindred 
peoples the instrument to ward off the geographic and economic 
fatalities which at times seem to conflict with our happiness and 
our standing as a free people. 

We must frankly face our international situation and not 
seek, in vain, to avoid it by fair words or by unfortunate 
manoeuvres. Whether we will or not, with no other country 
in the world are we bound by such close ties as with the United 
States. We should then aim to develop our national life, in 
entire harmony with the national life of our neighbors to the 
north, with no impairment of our autonomy, nor loss of our 
social, historical and racial traits. In close touch with our 
neighbors to the north, we enjoy the use of their capital in 
the development of our resources, their markets for the sale of 
our products, their technical skill to train our producing class; 
these are but some of the many advantages we derive from 
their higher civilization. They, in turn, need our labor, our 
metals, our fuel, our varied crops; while finding in Mexico a 
fertile field for their spirit of enterprise. Their relations with 
other countries of the world cannot be a matter of indifference 
to us, since their victories or their defeats must be reflected on us, 
either adversely or favorably; and the phenomena of an economic 
or moral order which such events bring in their train are certain 
to react in Mexico. 

In addition to these considerations, we should bear in mind, 
in defining our foreign policy, that public opinion in the United 
States, — the sound and well-informed public opinion, — rejects 
any policy toward Mexico that does not rest on absolute equality, 
cordiality and mutual respect. This situation helps our govern- 



— 28 — 

merits to outline a far-sighted foreign policy which shall know 
how best to turn to our own advantage the circumstances 
just defined. 

The preferential position given to our relations with the 
United States does not mean that we fail to realize the im- 
portance of our relations with other countries, although our 
contact with them cannot be compared, either from an economic 
or political standpoint, with that which we maintain with the 
United States. The intellectual influence exercised on us by 
certain European nations, the similarity of race, history and 
language that we have with other peoples, besides reasons of 
a commercial and financial order, maintain alive the interna- 
tional interest in Mexican matters. This conjuncture of events 
requires us to observe a conduct in our foreign relations which 
shall contribute to recover the respect of the world which we 
formerly enjoyed. We are not blind to the fact that the first 
condition in attaining this end is the performance of our inter- 
national duties, — a subject which we shall consider in detail 
in various chapters of this document, — but we should forth- 
with institute in our dealings with other peoples a serious, 
decorous diplomacy, without boastings impossible to maintain, 
which shall aim to have us regarded as honest men, rather than 
as subtle and invincible dialecticians. 

Our recommendations in this regard follow: 

The Mexican Government should adopt a frank and open foreign 
policy, free from special alliances and entanglements, and inspired in 
the concept of world brotherhood. 

In our relations with the other peoples of this continent, we 
should aim to have the principle of mutual respect for territorial 
integrity and political sovereignty prevail as a principle of Inter- 
American public law. 

Especially in our relations with the United States, our diplomacy 
should bear in mind that with no other country are we so closely 
bound by ties of geographic propinquity, by the exchange of 
commodities, and, in general, by countless reasons of an economic 
and moral order. 

The Government of Mexico should seek the early celebration of 
conventions with the United States for the settlement of the pending 
boundary questions between the two countries (the Chamizal Case 
and the definition of the status of international rivers), and for the 
facilitation of the exchange of commodities and the promotion of 
relations between the inhabitants of both countries, particularly along 
the border where the contact between the two peoples is so intimate. 
Among such conventions, particular attention should be paid to that 



29 



defining the validity of judgments and rulings of the civil courts of 
Mexico with regard to persons and things within the jurisdiction 
of the United States, and vice versa. Until such time as an inter- 
national agreement on the matter is reached, the Mexican courts 
should strictly observe the principle of reciprocity. 

Bearing in mind that, in normal times, the majority of our im- 
ports from, and exports to, the United States are carried by railroad, 
and in the absence of a united transportation and rate system which 
shall assure through traffic and avoid the inconveniences of the 
application of different laws and regulations, our government should 
initiate the execution of a treaty with the United States Govern- 
ment which shall embody the general conditions applicable to inter- 
national railroad traffic and rates. 



IV 

THE NATURALIZATION AND CIVIL STATUS 
OF ALIENS 

AMONG the novelties introduced by the Carranza legislation, 
and particularly by the constitution framed at Querétaro, 
those referring to the rights of aliens and naturalized Mexicans 
have been especially criticized abroad. Not only the former, 
but w^hat is more difficult to explain, the latter, as well, are 
hampered with countless limitations and even incapacities, 
which place them in a position of mortifying inferiority with 
regard to native-born citizens. 

It would be out of place to enumerate all the restrictive 
precepts of the new legislation on the subject. Mention will, 
accordingly, be made only of those laws which are particularly 
striking. 

Article 27 of the Querétaro constitution embodies the 
principle that aliens may not own real estate, nor be granted 
concessions covering waters, mines, and the like, except by 
the grace of the executive authority, after the interested party 
has made formal waiver of the right to invoke the protection 
of his government. 

While it is true that certain countries do not grant aliens 
the right to acquire real estate, we are, nevertheless, of the 
opinion that Mexico should return to the liberal system that 
prevailed under the constitution of 1857. Having due regard 
for the cultural and economic situation of our native population, 
coupled with the fact of its sparseness, it appears advisable to 
encourage the establishment of foreigners in Mexico. Experience 
has shown them to be elements of moral progress and factors 
in the development of public and private wealth. 

It should be said that the requisite demanded by Article 27 
of the constitution of Querétaro as a condition for every alien 
to own land, namely, the waiver of the right of invoking the 
protection of his government, is manifestly illusory. No foreign 
government recognizes the force of such a waiter. The law then 
fails in its purpose, and becomes useless and gratuitously hostile 
to citizens of other countries. 



— 32 — 

Provisions fixing the civil capacity of aliens have no place 
in the political constitution of the republic. They belong in 
general statutes, in special laws on naturalization, and in inter- 
national treaties. In the absence of express treaty stipulations, 
Mexico must accept, in general terms, the principle of the 
equality of civil capacity of Mexicans and aliens, excepting 
limitations required by the principle of reciprocity, and such 
other limitations as arise out of the needs of domestic safety 
or of insurance against international complications. 

With regard to foreign corporations, u^e believe that the 
incapacities placed on them by the Querétaro constitution, in 
provisions similarly incongruous in a constitution, reveal in the 
framers a mistaken appreciation of the present day needs of the 
country. We are not opposed, in principle, to the establishment 
of these incapacities, insofar as they are confined to the owner- 
ship of real property; but, at the same time, we believe that 
the legislator should mitigate the severity of his theories when 
the great interests of the nation so demand. The position in 
which Mexico now finds herself as the result of her internecine 
strife and the condition of the world money market caused by 
the European war compel the Mexican statesmen to adopt a 
generous policy which shall attract to the country capital to 
develop our resources and contribute to the moral and economic 
betterment of our down-trodden people. In harmony with this 
policy, it is necessary to return to the former system and to 
permit foreign companies to enjoy the same rights they enjoyed 
before the Querétaro constitution, as the most practical method 
of inducing foreign capital to engage in Mexican enterprises. 
At a later date, when the political equilibrium has been restored, 
when the methods of government admit of no question as to 
their probity, when, in a word, we have reconquered the con- 
fidence abroad which we once enjoyed, the time will have come 
slowly to force foreign capital to operate in Mexico within the 
forms of association prescribed by Mexican law; but everything 
which at the present moment is done in this regard will affect 
adversely the economic progress of Mexico. 

On the other hand, it is our opinion that the very lax 
requisites prescribed by our present commercial law for foreign 
companies operating in Mexico should be revised and adequately 
regulated. The State should receive abundant guarantees before 
recognizing the existence and juridical personality of corporate 
entities created under foreign law. It should equally assure the 



— 33 — 

safety of the interests of Mexican citizens who have acquired 
stock therein or who may have dealings with them. 

Article 33 of the Querétaro constitution vests in the President 
the power to expel any alien whose presence in Mexico he may 
deem inexpedient. Such power is repugnant to modern legal 
thought, which recognizes the right of every man to live in what- 
ever country suits his pleasure, with such limitations as the law 
may prescribe, not the caprice of a man, however high his official 
investiture. It is right that the undesiderable alien should be 
expelled, after he has been duly declared so to be, in accordance 
with the application of general precepts fixed by the legislator; 
but to leave to the irresponsible whim of a functionary the 
determination of the expediency of the continued residence of 
an alien in Mexico is tantamount to placing all foreigners living 
there in the status of residents by grace. Such a condition is in 
conflict with every principle of justice, with international law, 
and even with treaties now in force. 

In the case of naturalized citizens, the laws enacted by 
the Carranza regime prescribe such a large number of humiliat- 
ing exceptions and establish such a marked inferiority between 
naturalized and native-born citizens that it would appear as if 
the theory underlying these laws was that of closing the door 
to foreign immigration, to whose beneficent influence other 
nations of the American continent owe much of their progress 
and political stability. It is enough to cite the fact that today 
the requisite of being a citizen by birth is demanded in Mexico 
of anyope desiring to become a pilot or engineer of a Mexican 
merchant vessel, or an assemblyman in a city council. 

It is not to be expected that, in the face of such restric- 
tions which involve, at least, profound humiliation, naturalized 
foreigners in Mexico should feel any love for their adopted 
land and be ready to honor and defend it, as if it were their 
country by birth. Nor can the acquisition of such a mutilated 
citizenship be held in esteem by nationals of other countries. 

We believe that, in this regard, the prevailing views of 
world fraternity and the advantages to our own country, in view 
of the appalling poverty and illiteracy of the four-fifths of cwx 
population, call for liberal laws, more liberal even than those thai 
prevailed before the Querétaro constitution. As to unnaturalized 
aliens, we do not advocate any more general restrictions than 
are strictly necessary for the internal and foreign safety of the 
country and the preservation of our racial characteristics. In 



— 34 — 

the case of naturalized lorei^ncrs, we believe that the system 
prevailing in the United States should he adopted. There, the 
status of native-born citizen is required only for the presidency. 
With this sinj^de exception, the naturalized citizen and the native- 
born citizen should be equal in the eyes of the law. 

Our recommendations on this subject are as follows: 

Aliens should enjoy in Mexico the same civil rights as Mexicans, 
excepting only the power of the Government to expel the undesirable 
alien in such terms and conditions as the law shall prescribe. 

The civil rights of aliens may, however, be limited by the ap- 
plication of the principle of reciprocity, and on grounds of domestic 
or foreign safety, as deñned by law. Similarly, restrictions, and even 
prohibitions, may be introduced into the immigration laws as to the 
entrance into Mexico of foreigners of a certain race or status. 

Foreign commercial companies may engage in business in the 
Republic and acquire therein real property of any kind, whenever 
equal privileges are granted to Mexican companies in that country 
or state under whose laws they are organized. In any event, such 
foreign companies should be subject to the conditions prescribed by 
Me.xican law to prove their legal existence and corporate powers, 
and to safeguard the interests of Mexican stockholders and of all 
persons in Mexico doing business with them. To this end, there 
ought to be established a special bureau to examine and record docu- 
ments, as well as to see that foreign corporations comply with the 
obligations imposed by our laws. 

Neither the civil statutes nor the political laws ought to establish 
any distinctions between Mexicans by birth and by naturalization; 
but the law of naturalization should be revised so as to guarantee the 
sincerity of motive prompting the foreigner seeking Mexican citizen- 
ship. 

Neverthless, the requisite of Mexican citizenship by birth ought 
to be required to be President. In order to fill other public posts 
of a political character, whether of popular election or not, a 
naturalized Mexican citizen ought to have resided in the country for 
a period of not less than ten years from the date when he acquired 
Mexican citizenship. 



MUNICIPAL AUTONOMY 

'T^HE SUPPRESSION of the system of J ejes Políticos through- 
^ out the Republic is a change for the better, due, in all 
justice, to the revolution. Without considering the usefulness, 
from an administrative point of view, of these functionaries, 
we must admit that they served as effective instruments of 
governmental tyranny, thereby becoming not only unpopular 
but even detested. 

In order to guarantee the permanency of this achievement 
of the revolution, the Querétaro constitution provided that the 
basis of the territorial division of States and of their political 
and administrative organization should be the autonomous 
municipality. To this, no objection can be raised. But the 
framers of the above-mentioned constitution, out of deference 
to an old national prejudice, provided that each municipality 
should be administered by a city council chosen by direct popular 
vote, under the belief that this is a necessary condition to assure 
municipal autonomy. 

We are ready to admit that the municipality should con- 
stitute the political administrative division of each State, and 
that between the State government and the municipal govern- 
ment there should be no intervening authority (the intervening 
authority heretofore having been the Jeje Politico) ; but we 
reject, as scientifically incorrect and as contrary to experience, 
the theory that municipal autonomy only exists when municipal 
affairs are exclusively in charge of a corporate body known 
as a city council. 

Our own experience, confirmed by that of other countries, 
shows that nothing has ever been devised less fitted to administer 
the public affairs of a municipal community than a group of 
men, chosen by popular ballot, professional politicians for the 
most part, or mere agitators who at the very least use their 
offices for purposes almost wholly political. The corruption and 
incompetency that characterize city councils that administer mu- 
nicipal affairs indicate beyond question that another solution of 
the problem of good municipal government must be sought, 



— 36 — 



which shall not, of course, sacrifice the basic principle of the 
autonomy of the municipality. 

General rules cannot be laid down in this connection. There 
are municipalities which, through their lack of adequate revenue, 
their small number of inhabitants, and the simplicity of their 
municipal needs may be satisfactorily governed by a city council. , 
In such event, the administrative body ought to be composed 
of a small number of men chosen from among neighbors who 
personally know one another, and whose duties, light and in 
no sense technical, can be discharged under the direct super- 
vision of the community. 

But in the case of densely populated centres whose in- 
habitants are counted by tens or hundreds of thousands, the 
elements of the problem change completely. The election of 
councilors then becomes a question of politics, and the complex 
and varied character of municipal affairs renders difficult the 
wise selection of a larger number of competent administrators. 
Furthermore, individual responsibility is in such cases im- 
possible. 

Large city councils become, through force of circumstances, 
deliberative bodies, subject to political passions proportionately 
as the number of members is greater. By reason of their struc- 
ture and constituency, these bodies lack technical skill, and are 
unable to carry out any administrative task really beneficial and 
in the public service. It is but a step from this stage to that of 
dishonesty and chaos in municipal administration. 

Examples of this state of things were afforded by the city . 
councils of Mexico City, and those of the majority of the large 
towns in the Republic during the Carranza administration. 
Blackmailing councilors, dishonest employees, shocking ignor- 
ance and incompetence on the part of both, abandonment of the 
public services most needed by the community (for the upkeep 
of which, however, heavy taxes were collected from the people) 
— this picture of shame was the result of the erroneous applica- 
tion of a fundamental principle of democratic government. 

The method of administering a municipality should be 
determined by conditions obtaining in the municipality itself: 
what is advantageous to one may be disastrous to another. 
In some cases, we repeat, it will be advisable that the council 
be endowed with administrative powers; in others, that they 
be exercised by a mayor, with the right of supervision and 



— 37 



censure in the council, as well as the properly legislative func- 
tion of issuing municipal ordinances, approving expenditures, 
and authorizing contracts for public works, franchises for public 
utilities, etc.; in still others, it will be preferable that the ad- 
ministrative duties of the mayor be distributed among a small 
number of administrators. In any event, and whatever be the 
method adopted, the principle of municipal autonomy is to be 
safeguarded. This can be fully guaranteed by 1he popular elec- 
tion of officials, and with the administration of the mun'x'ral 
services and revenues as a sovereign attribute of the municipality, 
free from control by federal or state governments. 

We, therefore, submit the following recommendations: 

•The basis of the administrative and political organization of the 
Republic ought to be the autonomous municipality, it being clearly 
understood that between the properly municipal functions and the 
general powers pertaining to the state or federal governments, as 
the case may be, no official nor administrative functionary shall 
intervene. Accordingly, the constitution should forbid the restoration 
of Jefes Políticos, Prefectos Políticos, or any other similar authorities. 

The Federal Congress and the State legislatures ought to be 
charged with enacting for the Federal District and Territories and for 
the States, respectively, general statutes on municipal administration, 
and with the issue of special munic'pal charters in the case of the 
creation of new municipalities or of the reorganization of existing 
municipalities. In any event, the municipality ought to be sovereign 
in the administration of its services, as well as in the collection and 
disbursement of revenues assigned to it under the law. 

Mayors or other officials charged with municipal admin's':ration, 
as well as city councils or town corporations, shall be chosen by 
popular ballot. The powers of the latter class shall be fixed by law 
or by the municipal charter, on the ground that, except in special 
cases, they are to be essentially legislative and not administrative. 



VI 
EDUCATION 

THE SOCIAL condition of the Mexican people, like that of all 
backward peoples, presents many striking contrasts. Side 
by side with the more rudimentary and primitive industrial 
methods, are to be found the large manufacturing establishments 
of modern days. The transport of freight on the backs of man 
or beast competes with railroad traffic; the plough introduced 
by the conquistadores in the sixteenth century bars the way to 
the use of modern farm implements. Without indulging in rhe- 
torical figures, it may be said that Mexican society is composed 
of two distinct societies: that of the under-civilized forming the 
overwhelming majority, and that of those who, in relatively small 
numbers, live the life of modern civilization. 

According to data published at the end 1919 by the Director 
General of Education of the Carranza administration, the number 
of Mexicans who can read and write is but slightly in excess 
of three million, while the remaining twelve million of the popu- 
lation are sunk in illiteracy. The first group is fit to engage in 
democratic government, and can intelligently weigh its problems. 
Is it reasonable to say that those who comprise the second 
group, that Indians who speak no Spanish and know no world 
beyond the settlement in which they were reared, can realize 
what is meant by a ballot, a federation, the independence of 
the branches of government, or any other of the basic concepts 
of our political system? 

It is vain to argue that the same economic principles, the 
same social institutions, or political laws operate in this dual 
system of national elements. Mexican statesmen who have be- 
lieved, or have appeared to believe, that this is possible, must 
admit themselves worsted after a hundred years of unbroken 
failure. No one can loner ignore, if his word be sincere, that 
these human groups are incapable of permanent co-ordination, 
and that if they co-exist it is because one group, by force or by 
acquiescence, is subordinate to the other. It is this condition 
that occasions the profound crises and chronic convulsions that 
our history depicts. 



— 40 — 

l)iit the siihoreiinatioii ul ornj i^rinip to ttic other means 
tyranny atui injustice. Justice and lilierty are only to be attained 
when the great backward group is redeemed by the small civilized 
group, and succeeds in raising itself to that standard of self- 
governing peoples among whom democracy is a real function 
and not a mere word inscribed in statutes and enrolled in re- 
volutionary manifestos. We mean that the light of education 
must be diffused throughout the masses so as to open to them 
horizons now hidden; that physical needs and desires for re- 
creation and adornment, which their squalid condition has not 
hitherto allowed them, must be created, thereby stimulating their 
eagerness for work; that they must be given practical instruction 
in manual arts and agricultural training to redeem them from 
the deadly routine in which they are now submerged; and, lastly, 
that the spirit of solidarity with the community of which they 
form a part must be inculcated in them, progressing by stages 
from the settlement to the municipality, from the municipality 
to the state, and from the state to the nation. 

The universal graded school is, if not the first, at least one 
of the most effective instruments of education in this immense 
task. By universal is meant that the school-houses should be 
accessible not alone to the city multitudes but to the immense 
and even more ignorant population of the fields and mountains, 
until there is not a single nook or corner where its beneficent 
action is not felt. 

When this requisite has been satisfied, the curriculum of 
the grade school will depend upon the financial resources and 
teaching corps available, ranging all the way from rudimentary 
education to higher education, but ever guided by the pracfcai 
aim of making of each individual a civilized man oj action. 

The municipalities and states have not thus far been able 
to meet this immense obligation, either with sufficient means 
or quality of service. In the palmiest days of Mexico, the state 
and municipal schools satisfied the needs of barely seventeen 
per cent of the scholastic population, and private institutions 
added only four per cent more. 

Fiscal poverty has been the cause of. this inadequacy, as 
it must continue to be for many years to come. Today the states 
would be called upon to devote the total of their revenues, and 
even a little more, in order to furnish adequate educational 
facilities, at least in so far as the number of schools is concerned. 

The Carranza regime, which loudly and constantly boasted 



41 



of its love and interest for the masses and which held itself up 
to the world as the redeemer of the oppressed, counts among 
its great shortcomings that of having destroyed much of what 
former governments had done for the education of the people. 
It began by prohibiting in the constitution all intervention by 
the federal government in elementary education. If then sup- 
pressed the department of public instruction, that is to say, the 
instrumentality through which the federal government by means 
of such revenue as it had available, might remedy, in part, the 
immense deficiencies of state scholastic organizations. In pro- 
hibiting in private educational establishments the teaching of 
every religion, it deprived a portion of the people of the benefits 
which it might derive from private initiative in education. 

The results of this policy have been so fatal that in the 
very capital of the Republic, by the end of the year 1919, one 
hundred and twenty-eight public schools had closed their doors, 
and twenty-five thousand children of school age were deprived 
of all educational facilities. In other municipalities of the Federal 
District the disaster attained incredible proportions: a munici- 
pality, like Tacubaya, which prior to the revolution had twenty- 
two primary schools, like Xochimilco, which had thirty-six, had 
to close all their schools. 

If this occurred in the Federal District, — in the most popu- 
lated, wealthy, and cultured centre of the Republic, — it is easy 
to surmise the frightful condition to which this elementary service 
of popular education reached in the states during the Carranza 
regime. 

We readily admit that the government that has succeeded 
that of Sr. Carranza has announced certain laudable propositions 
designed to remedy the situation; but our judgment is that this 
matter requires a vast and comprehensive plan which shall place 
at the disposal of the cause of public education the largest 
financial resources available and the greatest amount of intel- 
ligence which can be called into play. 

Our specific recommendations are as follows: 

In view of the impossibility of establishing in Mexico a really 
democratic regime so long as twelve million Mexicans out of slightly 
over fifteen millions can neither read nor write, the conclusion is 
forced upon us that the evil of illiteracy constitutes a grave and 
urgent problem. Accordingly, we denounce the policy set up by the 
Carranza constitution which rendered almost impossible the utiliza- 
tion of private initiative in popular education and which forbade all 



— 42 



intervention by the federal powers in primary instruction. All 
energies, those of individuals and private associations no less than 
those of public authorities, — federal, state and municii)al, in their 
respective jurisdictions, — should be bent to achieve the redemption 
of the great mass of the Mexican people from the appalling ignorance 
in which they live, and to make citizens in fact of those who have 
heretofore been so only in name. The federal constitution should, 
therefore, embody as one of the individual guarantees freedom of 
leaching, with no other restriction, in so far as may relate to primary 
instruction, than that it be subject to the curricula of similar public 
schools and to official supervision, particularly in regard to civic 
instruction and history. 

The same instrument should likewise prescribe the concurrent 
power of the municipalities, states and federation to establish and 
maintain primary schools. 

The tendency of these schools should be essentially practical, 
civic and educational. They should aim to form civilized members 
of the community. 

In view of the need of not less than sixty thousand such es- 
tablishments to make primary education universal and effective, 
the intervention of the federal government must be necessarily large. 
Without the resources of the federal government and without the 
technical elements which it has at its disposition, this urgent and 
indispensable work cannot be carried into execution. Accordingly, 
we recommend the restoration of the department of public instruc- 
tion, which shall be the instrumentality of the federal government 
in this phase of its labors. 

The federal congress should enact whatever legislation is neces- 
sary for the exercise of the concurrent power pertaining in this 
matter to the various authorities, so that conflicts of jurisdiction 
may be avoided and methods of instruction harmonized, with a 
view to attain uniform results. 

We hold the reorganization of the libraries in the Republic and 
the creation of popular circulating libraries to be a public need. 



VII 
ADMINISTRATION OF JUSTICE 

WHEN the courts of justice are powerless to safeguard the 
rights of the individual against the corruption of wealth, 
the influence of the powerful, and the political interest of the 
government, society becomes profoundly agitated, a fact which 
paves the way for angry protests, and for convulsions of reaction. 

Nevertheless, every violent surge of emotion against in- 
justice provokes fresh manifestations of injustice. Revolution 
unleashes the basest passions and raises to power those least 
ready to submit to the orderly and exacting processes of organ- 
ized justice. This, in turn, lays the foundation for fresh violent 
outbursts within an endless cycle of anarchical disorder and 
ruthless oppression. 

The history of Mexico offers one of the most convincing 
examples of what we have just said. No single factor, then, 
would more efficaciously aid in the work of pacification essential 
to a program of general reconstruction, than a policy firmly and 
honestly aimed at making justice effective; for nothing would 
so tend to avoid fresh periods of immorality and violence, as the 
feeling of solidarity created in the minds of the people by the 
conviction that each of their number is to enjoy full guarantees 
in the exercise of his fundamental rights. 

This subject is too vast to be treated in full here. Our 
political organization calls for at least two classes of courts of 
justice, each functioning within its proper sphere. The constitu- 
tion of the one and of the other has basic defects, the outcome 
of our backward social development, of tradition and of routine. 
Their organic laws, although predominantly satisfactory, are, 
nevertheless, undesirable in many ways. They encourage trickery, 
blight the judicial sense, and render justice inaccessible to the 
great majority of Mexicans. From this point of view, we may 
say that our procedure, and much of our substantive law are 
based on a social condition which only exists in the case of a 
small minority of the population, and take no account of the 
social, economic and intellectual condition of the great mass 
of the people. 



— 44 — 

A revolutiüii wliicli, like the "constitutiünalist" revolution, 
pronounced judgment on the past, ought to have taken note of 
the evils we have just outlined; but it failed to do so 
lamentably. Profoundly respectful of our traditions and our 
history, we none the less yearn for an era of progress; but this 
cannot be achieved through the old structure of our laws. We, 
therefore, advocate a sweeping revision of our civil and penal 
statutes and procedure, the aim of which shall be to realize the 
ideal of social justice: equal opportunities for all. 

We denounce as one of the most regrettable defects of our 
judicial organization the method by which the highest court in 
the land functions, organized as it is in the manner of a parlia- 
mentary body, with a variable quorum. Like every tribunal, 
the membership of the Federal Supreme Court should be fixed, 
if its resolutions are to have weight and create real jurisprudence. 

Before the Supreme Court there come very year from five 
to six thousand cases; and this number will steadily increase as 
our national life becomes more complicated. For the same 
reason, the nature of the cases tends to become more and more 
diversified. Hence it is essential that the labors of the Court 
be divided into sections (salas), on the understanding, however, 
that the full court shall intervene to state the law whenever the 
decisions of the sections shall conflict. 

Several systems for choosing the personnel of the Supreme 
Court have been tried in Mexico. In the assembly that framed 
the Querétaro constitution there were ardent champions of the 
popular election of judges, that is to say, by the outgrowth of 
political contests. After much labor, this great truth forced its 
way forward: that the electorate is not qualified to pass upon 
the legal learning and moral qualities of judges. The vindica- 
tion of this principle should not be lost, although we must 
condemn the method of designation established by the Querétaro 
constitution for certain judicial authorities. It will suffice to cite 
the lamentable result in personnel which this method of selection 
has borne, to justify the view that the fitting body for the selec- 
tion of judges is not Congress, not the Lower House whose 
every act is inspired in political passion and partisan bias. This 
system has brought about not alone the designation to the 
Supreme Bench of persons unworthy of the loftiest judicial rank, 
but is responsible for the painful spectacle of three Justices 
who, although distinguishing themselves for learning, independ- 
ence and integrity during the first part of the Carranza regime, 



— 45 — 

yet failed to receive the merited honor of reelection, merely be- 
cause they did not have the necessary political backing. 

This illuminating experiment obliges us to condemn the 
system established by the Querétaro constitution, and to recom- 
mend another analogous to those followed in other countries 
successfully. 

And yet, however wise the designation of a judge, the 
desideratum of a sound administration of justice will not be 
attained, if he is not made a respectable and responsible free 
agent: free from the fear of sacrifice if he does not yield to the 
demands of those in power; free from the menace of poverty- 
stricken old age, after the best years of his life have been spent 
on the bench. 

We mean that, in the first place, the judicial functionary 
should be permanent. Permanency is an essential condition of 
independence, a guarantee of integrity and a basis of public 
confidence. The judicial official should not be removed except: 
{\) for wrong-doing established after impeachment and convic- 
tion in due course, or (2) through promotion to a higher office. 

If our judicature is made a career, in which merit and 
service are counted upon to reach the highest positions, with 
compensation in accord with the social status, there may be 
some hope that the judiciary in Mexico may attract the better 
type of man. Today he avoids this service, so as not to be 
exposed to the jeopardy of uncertain employment. 

But permanency alone will not suffice to safeguard officials 
who devote their lives exclusively to the service of the judicature, 
if they are to be left exposed to accidents, ill-health or abandon- 
ment in old age. The law should provide for all these contin- 
gencies. It should also establish the rules to make the responsi- 
bility of judges effective, correcting their mistakes and punishing 
their offenses. 

Compelled through exigencies of space to limit ourselves 
to general observations on this important matter, we shall en- 
deavor in the following conclusions to .set forth briefly our 
views on the problem: 

We recognize that one of the evils which most deeply affect 
Mexico is its vicious administration of justice: vicious because of 
the technicalities of judicial procedure; because of the spirit of many 
of our substantive laws which do not recognize the great social 
inequalities which unfortunately characterize the life of our people; 
and, lastly, because of the lack of culture and independence of 
the judges. 



— 46 — 

We can do no more here than to recommend, in general terms, 
the early revision of our laws, both those that define rights as well 
as those that relate to procedure. 

Such a revision ought to be inspired in the modern concept of 
social justice and in the necessity of making the civil courts, today 
virtually closed to the poor and the outcast, accessible to the largest 
possible number. 

In penal procedure the inhuman practice of solitary confinement 
(incomunicación) ought to be wholly proscribed, as well as every 
form of compulsion designed to obtaining a confession from the ac- 
cused. Freedom on bail should be the privilege of every accused, 
and ought only to be suspended when the offense with which he is 
charged is punishable with a penalty of ten years imprisonment, or 
with capital punishment. 

When the offense is not punishable with imprisonment or death, 
the accused should not be detained at any time. 

The Federal Supreme Court should funtion in its true character, 
as a tribunal, with fixed membership; and not as a parliamentary 
body with a variable quorum. Cases coming within its jurisdiction, 
including those of the constitutional cases of amparo, should be 
distributed among its members arranged in sections (salas) ; but 
the full bench should assume such responsibilities as may be neces 
sary to obtain a uniform jurisprudence. 

The Justices of the Supreme Court should be chosen by the 
Senate from lists of three names each, submitted by the President. 
The resignations of these justices should be passed upon by the 
Senate. The Circuit and District judges to be chosen by the Supreme 
Court sitting as a full bench. 

The judges of the Superior Courts of the Federal District and 
Territories should be chosen in the same way as provided for those 
of the Federal Supreme Court. These Superior Courts to designate 
the judges under their jurisdiction. 

The states should adopt in the designation of local justices 
and judges a procedure analogous to that outlined above, the former 
to be designated by the respective legislature on the proposal of 
three names submitted by the Governor, and the latter by ap- 
pointment of the Superior Tribunal. 

Every judicial functionary ought to hold office indefinitely, 
and only be suspended or removed as the result of impeachment. 
The Justices of the Supreme Court should be subject to a special 
impeachment procedure in the same manner as provided for other 
high federal officials. .The laws on impeachment, admittedly deficient, 
should be revised, so that judicial responsibility should not be a 
farce, as it has heretofore been. 

The law ought to prescribe the terms under which the judicial 
functionaries are to be pensioned for old age or disability, and the 
amount they should receive in such event. The compensation to 
be paid to judicial functionaries should be sufficiently large to permit 
them to live with the comfort which their respective positions 
require. 



VIII 
RAILROAD POLICY 

IT DEVOLVES in great measure upon the Mexican Govern- 
ment to solve the complex problem that our railroads now 
present, not alone because it is the duty of the State to see that 
an essential public service, such as transportation, meets the 
needs of the country and serves as a direct factor of progress, 
but also because in our case the government has serious con- 
tractual obligations toward the railroads, in addition to the 
responsibilities growing out of the state of war and disorder that 
has prevailed for the last ten years in Mexico. 

Only a general plan of railroad rehabilitation can be under- 
taken here. In the first place, it is necessary to act on a premise 
that has heretofore only been partly realized: that the govern- 
ment must be able to protect the lines, property, and rolling 
stock against destruction. So soon as this result has been 
achieved, the first step in the program of rehabilitation should 
consist in returning the management of all lines to their re- 
spective companies. 

Whatever be the pet theories of economists and sociologists 
as to the role of the State in the handling of public services, 
— and railroad transportation is one of them, — experience 
shows that as a general rule State administration of railroads 
is much inferior to that of private initiative. An example of this 
is afforded by the American railroads during the period when, 
because of the exigencies of war, the government took charge 
of the transportation system of the United States. The failure 
of this experiment in governmental administration cannot be 
more eloquent. As is only natural, the Mexican government has 
experienced an even greater failure, attributable not only to 
the deficiences charasteristic of every bureaucratic organization 
when it acts as an industrial unit, and natural enough under the 
peculiar conditions of disorder obtaining in Mexico, but also to 
the lack of integrity of high railroad officials and to the abuses 
and usurpations of government functionaries and of military 
chiefs in active command of troops. Corruption has filtered 
through all ranks; the railroads have been a source of immoral 



— 48 — 

speculation and illicit personal profit. Generals and other favorites 
secure, or used to secure, traffic concessions even in the shame- 
less form of rebates on rates paid by the public. In a word, it 
may be said that the railroads of Mexico considered as a branch 
of public administration are, next to the army and the courts, 
the most corrupt and inefficient official organization. 

In any re-organization of the railroad system known as the 
"National Railways of Mexico", in which the Mexican Govern- 
ment is a stockholder, the interests of other shareholders, re- 
presenting approximately fifty per cent of the stock, must be 
taken into account. Still less will it be possible to ignore the 
bond and security holders, who rely on the guarantee of several 
mortgages on the lines and their appurtenances. 

These creditors are entitled to substantial claims, through 
the failure to pay interest for seven years or more and through 
the diminution of the guarantee, because of the lamentable 
deterioration of the properties subject thereto. The Mexican 
Government is liable for all, or almost all, these claims, because, 
in the first place, it has been directly operating the lines and 
enjoying the proceeds therefrom; and in the second place, be- 
cause under former contracts it bound itself to guarantee the 
capital of the so-called general mortgage, which may be con- 
sidered due and payable, and which, without counting large 
unpaid interests, reaches the aggregate of 320,000,000 pesos 
(160,000,000 dollars). 

It is idle to assume that with such a burden of obligations 
and in view of the enormous deterioration of lines and appurte- 
nances, the Mexican Government, — - however honest and com- 
petent we may assume it to be, — can restore our system of 
National Lines, so that it can fulfill its mission. Furthermore, 
it is probable that the day when order is definitely restored, 
the government will be called upon to meet the claims of mort- 
gage creditors, who have relied upon their contracts and who 
will demand as a condition precedent at least the delivery of 
the lines, so as to prevent their further exploitation with the total 
abandonment of the financial obligations for which they are 
liable. This may entail the loss of ownership of the railroads 
for the company owning them, and consequently the complete 
cancellation of the shares which the government possesses in 
the company. 

We should in all fairness say that, however much the public 
may believe that the interest acquired in the National Railways 



— 49 — 

by the Diaz administration should be conserved, it is impossible 
not to acknowledge the fact that this interest involves the as- 
sumption of obligations w^hich the country is in no position to 
carry, and w^hich was to a large degree the price of acquisition. 
The sacrifice, therefore, of the shares representing this interest 
would be of small moment, if in exchange the government could 
successfully release itself from some of the onerous guarantees 
it has assumed. Such a sacrifice would, furthermore, be merely 
temporary, for the fact should not be lost sight of that these 
railroads are subject to the right of reversion after a certain 
number of years, and that, therefore, irrespective of the settle- 
ment now made with the creditors, the lines and their appurte- 
nances will all, sooner or later, pass into the full ownership of 
the Mexican Government, free of encumbrances. The shares 
acquired by the Diaz administration merely represent, therefore, 
a right of transitory duration. 

Consequently, we are of the opinion that the Mexican 
Government should enter into arrangements with the share- 
holders and bondholders upon the general terms to be set forth 
in the conclusions of this chapter, or on other terms that may 
be acceptable, without sacrificing the honor of the government 
and without abridgment of the legitimate right which the govern- 
ment has to intervene in matters of railroad transportation, in 
accordance with sound principles of political economy, as pre- 
scribed in the railroad law and stipulated in the franchises. 

It is also to be borne in mind that, whatever solution may 
be reached, the government will retain the right to take over, 
in whole or in part, the administration of the railroads of Mexico, 
«vhenever required by the maintenance of order or by the 
Tiilitary defense of the country. 

In the matter of general policy, we believe that the govern- 
ment should promote the construction of more railroads feeding 
the large trunk lines, and the construction of other lines es- 
tablishing contact between important portions of Mexico now 
somewhat isolated because of a lack of railroads. 

We hold the view that the Mexican Government should 
adopt at this time a railroad policy based on the following 
considerations: 

The Mexican Government should return to their owners, at the 
earliest possible moment, the railroad lines and their appurtenances 
that it has seized, and negotiate the necessary arrangement for the 
payment, in instalments, of responsibilities directly growing out of the 



50 -- 



seizure and destruction of fixtures and rolling-stock, in so far as these 
responsibilities may be legally imputable to the government. With 
regard to the lines comprising the National Railways system, the 
government should, furthermore, bring about the reorganization of 
the company, granting the bond-holders a direct participation there- 
in, even though it be at the cost of the temporary or permanent 
sacrifice of the stock which the government represents in the com- 
pany. This, however, should only be done in exchange for sub- 
stantial advantages, among them that of the release of the Nation 
in the future from the guarantees securing the payment of mort- 
gages whether by way of principal or interest. As to liabilities 
already incurred through existing guarantees, we believe that the 
government should procure their liquidation, as far as possible, in 
exchange for the extension of the duration of the franchises, but 
maintaining, at all costs, the principle of reversion in the favor of 
the Nation, as provided in the Railroad Law, and the govern- 
mental privilege of free postal transportation. 

No pains should be spared to build railroads connecting the 
peninsulas of Yucatan and Lower California with the railroad 
systems of the country. So, too, a survey should be undertaken 
of the feeders of the trunk lines, the construction of which shall 
serve to develop those sections of the Republic better susceptible to 
growth, because of conditions of population and nature of products. 
On the completion of these surveys, the building of such tributary 
lines should be subsidized or otherwise encouraged. 

Because of the strategic and political importance of the Te- 
huantepcc Railroad, the Nation should retain the ownership of this 
line; but its operation might be contracted for, during a limited 
period, with some private enterprise, either in the form of a partner- 
ship or in any other form deemed advantageous. 

The Commission On the Regulation Of Rates should be re- 
established, but so reorganized as to be not merely an advisory 
board, but empowered to approve rates and even enforce them, 
basing its action on the interests of the companies and of the public. 

Inasmuch as the Mexican railroad personnel has given proof of 
its efficiency, all railroad companies operating in Mexico should be 
required to have not less than ninety per-cent of their employees 
respectively recruited from among Mexican railroad men. 



IX 
NATIONAL ARMY 

A DISCUSSION as to whether the dissolution of the Federal 
-^"^ Army carried out by the Carranza revolution was or was 
not a wise measure is out of place here. The fact is that the 
old military organization of the country has disappeared and 
that the revolutionary forces, which have taken its place, are 
far from deserving the title of "National Army". The lack of 
military and civil training of almost all their officers, the no- 
torious immorality of certain of them, and the lack of discipline 
of the rank and file force upon us the painful conclusion that 
Mexico has not an army that can be trusted to uphold our insti- 
tutions, and defend the integrity of the republic. 

The government emanating from the revolution closed the 
Military College of Chapultepec (deserving respect for its 
glorious traditions if for nothing else), and substituted for it 
an elementary school which can train only officers of a very 
inferior type. At the beginning of the present year, the old 
College was reopened, and certain officers of the extinct Federal 
Army included among its teaching staff. But the curriculum 
adopted is so deficient that many years must elapse before the 
officers trained under these new conditions can attain the intel- 
lectual development which the military career demands today. 
Again, the systematic exclusion of almost all officers of the old 
regular army deprives the new army of the valuable services, 
— for which, during many years, a substitute cannot be found, — 
of officers familiar with the art of war, who have devoted the 
best years of their life to the career of the soldier. 

Everything is still to be done in this field; but it would be 
unwise to recommend that the army be reconstituted along the 
old lines, the defects of which we all readily admit. A detailed 
examination of the subject is, however, not feasible here. We 
shall confine ourselves to a presentation of the principles which 
should form the basis of the organization of a truly national 
army, namely, that it is the duty of every citizen to defend the 
republic and uphold its institutions. Accordingly, every Mexican 
physically fit to bear arms should form part of the army. In 



other words, military service should be universal and compulsory. 

Armies in Mexico cannot be formed of volunteers, except 
in times of rebellion when serving revolutionary factions. By 
the side of those who in good faith fight for a principle, are to 
be found bandits, outcasts, and adventurers of every class and 
condition. It is almost a superhuman task to convert these 
hordes into a disciplined and regularly constituted army. The 
different governments are accordingly bound to resort to arbi- 
trary recruiting (leva), more or less disguised by the name 
of compulsory service; and so the ranks are swelled by drunkards, 
thieves and vagrants, to say nothing of scores of unfortunates , 
who are the victims of the caprice of those in authority. The 
collapse, therefore, of the regular army whenever the country 
has passed through a crisis is not surprising; while the corps 
of officers, among whom there have been many honorable and 
cultured men, liave been powerless to prevent the disaster. 

An army formed of men who are fulfilling a patriotic duty, 
not of men forced into service, who are only held together by 
the rigor of stern discipline, will be the best guarantee of peace 
and the stability of governments. This cannot be achieved with 
the armies we now have. Our history proves, — and recent 
events have merely confirmed it, — that governments in Mexico 
fall more readily at the hands of their own soldiers than by 
the onrush of revolution; and from this point of view it seems 
needless to emphasize the importance of establishing a method 
of recruiting which shall put an end to the tyrannical dictation 
of the military caste over the civilian population. 

Many persons will surely think it impossible to organize 
an army in which men of education and of habits so diverse 
as are to be observed among our so-called social classes must 
live in the intimacy of military service. This objection, however, 
far from being a serious reason for abandoning the only system 
of forming an army such as we propose, may be minimized by 
various methods, into the details of which we cannot enter here. 

Regional recruiting, the establishment of a system of volun- 
teer service of six months or one year for young men who by 
reason of their training and culture are better qualified than 
the artisan and the peón, and other special arrangements, will 
serve to diminish the disadvantages previously outlined, and 
to overcome the repugnance of class, so detrimental to the con- 
solidation of a democracy. Universal service will be the most 



— S3 — 

efficacious means of reducing to a common level those inequalities 
that are incompatible with a regime of political liberty. 

Military instruction should be resumed with a curriculum 
so disposed as to form permanent officers out of the young 
men desiring to enter the career of arms. There should likewise 
be instituted a body, which we have never had in Mexico, namely, 
a General Staff with powers similar to those of the General Staff 
of the principal foreign armies. Again, there should be organized 
a corps of military administration which shall eliminate from 
our armies the women camp followers {soldaderas) who, in ad- 
dition to their disadvantages, and the lamentable backwardness 
they reveal, make us the butt of all writers on this subject. The 
Secretary of War should be a political appointee with purely 
administrative duties and not the supreme head of the army, 
as he has always been in Mexico. 

If we can succeed in forming an army along the lines thus 
roughly outlined, pretorian armies will cease to exist; and not 
only a work of incalculable political significance will have been 
achieved, but a real task of civilization will also have been ac- 
complished. The illiterate youth periodically entering the service 
will leave it not only having gained the rudiments of culture, 
but also well disciplined, with an understanding of what is 
meant by dignity and civic duties. They will be vigorous in 
body, thanks likewise to the strenous military life. The barracks 
will cease to be what it is today, a place of confinement wherein 
the soldier consumes his soul in despair and his body in vice, 
but a school of reform, a nursery of citizens and patriots. To 
this end the traditional type of Mexican barracks should be 
abandoned and gradually replaced by military cantonments 
outside of large towns. 

There will always be volunteer soldiers, enlisted for long 
terms, from whom may be drawn the non-commissioned per- 
sonnel. These, together with the officers, will form the skeleton 
for the training of the groups of recruits periodically renewed. 
There should, likewise, be a roster of professional officers; but 
the bulk of the army should be drawn from all classes. 

What we have said of the army is applicable, in principle, 
to the navy. Recruiting for this branch of the service should be 
among the sea-faring element in our population; and in addition 
to the active personnel, there should be reserves. The organiza- 
tion and curriculum of the Naval School should be adapted to 
the needs of the country. 



— 54 — 

Still another problem is to be solved in the reorganization 
of our army. There are many generals and officers of the old 
Federal Army, of the Carranza troops, of the "Convention" 
forces, of the Zapatistas and several other factions, many of 
whom would like to belong to the army. It is not advisable to 
ignore these men. In any program of reconstruction, all available 
material must be used. Our recommendations on this topic will 
show how we regard this matter. 

In a word, the army cannot fulfill its high purpose until it 
is purged of the vices that have allowed it to become an instru- 
ment of ambitious pretorians and to act as a political group 
making and destroying governments, in disregard of military 
honor and the institutions of the country. 

It is, of course, to be understood that the following recom- 
mendations are to be given effect with due regard to the finan- 
cial resources of the country: 

The national army ought to be composed of active and reserve 
forces, the former consisting of men between eighteen and twenty 
years of age, in such numbers and for such terms of service as 
the law may determine; the reserve forces consisting of citizens 
who have seen active service. 

The Military College, the Naval School, and such other institu- 
tions of military training as may be needed, ought to be reorganized 
or established, as our resources permit and our national needs 
require. Young men desiring to follow the career of arms ought to 
enter these establishments and graduate as officers of the respective 
branches of the service. Young men following civil careers or 
having certain civil training might remain in active service only 
such time as is strictly necessary to acquire the technical knowledge 
to enter the branch of the service in which they have been trained 
as reserve officers. 

Non-commissioned officers shall be chosen from among those 
persons who have voluntarily enlisted for long terms. 

A General Staff shall be organized, as also a corps of military 
administration. The duties of the Secretary of War shall be solely 
politico-administrative. 

An effort should be made to substitute the barracks for military 
cantonments outside of populated centers, and the service so organ- 
ized as to promote the moral and intellectual advancement and the 
physical development of the young men, and to be, at the same 
time, a school of civics and love of country. 

The following rules shall be observed in determining the petitions 
for admission into the army filed by those who have obtained 
rank in the forces of the various revolutionary factions or in the 
former federal army: 

A — All ranks from colonel upward that have been ratified 
by a legal or de facto Senate to be recognized; 



— 55 — 

B — Ranks inferior to that of colonel that have been conferred 
by any government which shall have functioned in the Republic, 
either in law or in fact, to be likewise recognized; 

C — Persons holding military ranks not comprised within either 
of the foregoing classes are to file petitions before courts of honor 
composed of persons of recognized integrity and efficiency named 
by the Government. 

These courts shall render their decisions as their consciences 
may dictate, without taking into account considerations of a tech- 
nical order, but rather weighing the moral qualities of the applicant, 
the good faith with which he defended the cause he embraced, and 
the practical ability he demonstrated while in service. 



y 
\ 



LABdR LEGISLATION 



ANVONE not acquainted With the history of the labor problem 
in Mexico will be surprised at the importance ascribed to 
it in a country which has not yet reached the industrial stage, 
and where the laboring element in the technical sense does not 
amount to two per cent of the total population. This phenome- 
non presents its most striking manifestation in the fact that the 
constitution itself contains a series of labor provisions embody- 
ing some of the most advanced theories of modern socialism. 
All these measures, we repeat, are for the benefit of a slender 
minority which, without effort or sacrifice, has won victories, 
some of which have not yet been achieved by the working 
classes of highly industrialized countries, after more than half 
a century of constant effort. 

The true social problem of Mexico is not that of our 250,000 
or 300,000 industrial workers, but that of the millions of our 
agricultural laborers. Failing to realize that the workers who 
directly produce the necessaries of life for our population, — 
and who are the most neglected, — should receive special con- 
sideration, the legislators of Querétaro favored the industrial 
class, granting them privileges which often serve as an incentive 
to destructive agitation. On the other hand, little or nothing 
practical did they accomplish for the former; and although the 
constitutional text ordains that all provisions on this topic should 
apply to all forms of labor, it is axiomatic that the problems of 
agricultural labor differ widely from those of the industrial 
worker. The latter, and only the latter, appears to have deserved 
the attention of the framers of the much-vaunted constitution, 
who gave preferential consideration to a restricted problem of 
small relative importance, rather than to a tremendous problem 
of a general nature. 

And yet this attitude may be explained. The Querétaro 
convention was not, either in origin or in personnel, a body 
representing the Mexican people, while the low standard of 
intellectuality of the great majority of its members made it pos- 
sible for a handful of labor agitators and academicians to impose 



( 

— 58 — / 

their will, and to embody in the , :onstitution their favorite 
theories, some of which the Mexican \/orking-man had not even 
dreamed of securing. 

Having won this spurious victory, the apostles of socialism 
undertook an effective campaign of pr(/ laganda and organization 
among the working classes, and as ai result, have produced the 
intense activity of the diminutive Mexican industrial world. 

The foregoing remarks should /ot be construed as a con- 
demnation of the legitimate achieve^^ents won for the workers, 
even though they are due to the artificial situation above de- 
scribed. On the contrary, we believe that certain of the principles 
thus won are only in compliance with the imperative demands 
of social justice, and that it is important that they should not 
be lost through the natural reaction they awaken among the 
capitalistic classes. We shall proceed to make a rapid examina- 
tion of the labor provisions, in order to present our conclusions. 

Article 5 of the Querétaro constitution wisely extended the 
constitutional guarantee of freedom of contract to work contained 
in Article 5 of the constitution of 1857. We have only one 
objection to raise to the new text. We refer to the pro- 
hibition of temporary surrender of the right to exercise a certain 
profession, or engage in a branch of industry or commerce. 
Under this inhibition, no one having peculiar qualifications can 
bind himself for a fixed time to devote his skill to a definite 
industry. The theatre manager or the manufacturer who con- 
tract for a certain period the services of an actor or chemist 
cannot, under this article, prevent the actor or the chemist from 
serving a competitor. This is manifestly contrary to reason 
and to equity, and is, furthermore, in conflict with accepted 
practices. 

With this absurd restriction eliminated, we do not hesitate 
to recommend the incorporation of Article 5 of the constitution 
of 1917 into that of 1857. 

The other provisions of the constitution of Querétaro relat- 
ing especially to labor are to be found in Article 123. Not a 
single one of them should rationally appear in the political 
constitution of the Republic. The very beneficiaries of the 
precepts may be prejudiced by the difficulty in amending them, 
should experience warrant amendment. A constitutional text can 
only be changed after complying with numerous requisites, not 
always easy to satisfy. 

Again, inasmuch as a great deal of this labor legislation 



69 — 



is an experiment, subject to changes flowing from conditions of 
climate, habits of the people, class of industries, and several 
other factors, the most reasonable and expedient step, — and in 
fact the .gnly step in harmony with our political system, — would 
have been for each State to enact its own labor legislation in 
consonance with the stage of its industrial development, without 
being compelled to follow the insuperable restrictions of a 
constitutional text. 

We do not hesitate, then, to say that the inclusion in the 
political constitution of Mexico of the series of principles con- 
tained in Article 123 of the constitution of Querétaro is legally 
absurd, and contrary to the very social interest sought to be 

benefited. 

For this reason, and for the sake of brevity, we shall omit 
a detailed analysis of Article 123. We have already stated that 
some of its precepts are laudable, and that others are either 
anti-economic or unjust. Still others we hold to be merely 
ludricrous,— such as that providing that working women may 
nurse their children for two periods of onehalf hour each during 
the working day,— or immoral, as that granting exceptional 
privileges to working women by reason of maternity, without 
distinguishing between those that are married and those that 
are not, thereby promoting illicit unions and a relaxation of 
morals in shop or factory. 

In the conclusions which follow we shall set forth the 
principles which, in our judgment, should more urgently be 
taken into account by the Federal Congress and State legisla- 
tures, within their respective jurisdictions, in the enactment of 
laws 'governing the relations between capital and labor: 

In labor legislation the constitution should confine itself to 
establishing as a right of man freedom in the exercise of all lawful 
activities, without other hmitations than those required by the public 
interest. We recommend the definitive adoption of the text of 
Article S of the constitution of Querétaro which assures this funda- 
mental right, except in so far as this text encroaches upon the liberty 
of renouncing, by agreement and for a limited period, the exercise 
of a certain profession, industry, or trade. 

In view of the conditions pecuhar to industrial labor, we believe 
that the provisions relating to this class of work should not be the 
subject of scattered precepts of the civil code, but should be in- 
corporated into special legislation. In no event, should these provisions 
form part of the Federal or State constitutions. 

We recognize that the working classes should be guaranteed in 
the exercise of lawful means of defending their collective interests. 



60 — 



among such being peaceful strike, the organization into unions 
and syndicates, and the right to deal with capital through authorized 
labor representatives. On the other hand, the law will have to re- 
cognize the correlative right of employers to engage workmen not 
affiliated with unions or syndicates, and at any time to suspend 
operations, provided this is not done maliciously or in violation of 
labor contracts. 

The law should not recognize the right to strike in enterprises 
of a public service character or in governmental employment. Ac- 
ceptance of work in these classes of labor involves the relinquishment 
of the right to strike. The laws should in these cases prescribe strict 
regulations to govern the suspension of work, as a protection to the 
rights of the working man. 

We believe it necessary that the law should establish especial 
boards of conciliations charged with preventing, and where necessary, 
settling conflicts between capital and labor; but we do not recom- 
mend compulsory arbitration except in cases where the worker does 
not possess the right of strike. 

The principle of the eight hour day contained in the Querétaro 
constitution should be incorporated in all labor legislation. 

We likewise advocate the complete suppresion of the "company 
store" (tienda de raya), and the prohibition of the payment of wages 
in any other medium than cash. We demand the enactment of pro- 
visions effectively to combat the vices which are the scourge of our 
working classes, such as gambling and alcoholism, and to protect 
children and women from excessive labor, as well as from work in- 
compatible with age and sex ; to impose upon employers the obligation 
to maintain in factories and workmen's dwellings the most hygienic 
conditions possible; to make compulsory the establishment of life 
and health insurance; and, lastly, to promote habits of thrift through 
the creation of saving banks, cooperative stores and other similar 
organizations. 



XI 

RESPONSIBILITIES GROWING OUT OF DISORDERS 
IN MEXICO 

WELL RECOGNIZED principles of international law clearly 
define under what conditions a country which has been 
the theatre of domestic disorder is bound in law to compensate 
the citizens of other countries for damages incurred by them in 
their person or property. The Mexican Government must abide 
by these principles of law, into a discussion of which it is not 
possible to enter here. It may not attempt withal to avoid its 
unquestionable responsibility nor evade legitimate claims made 
upon it. 

The Carranza government adopted a false and untenable 
position in this regard, creating a species of administrative court 
before which all claims were to be filed. Nevertheless, it granted 
to claimants the right to demand a review of rulings of this 
board by a commission of which one member would be desig- 
nated by the diplomatic representative accredited in Mexico by 
the claimant's government. 

With regard to the claims of nationals, it provided that the 
decisions of the Court of Claims would be subject to review 
in the regular course of business by the President of the Republic, 
on whose supreme and personal decision would depend the final 
disposition of the claim. 

It should be noted that none of the above provisions were 
legislative enactments, but proceeded from President Carranza 
under the use of dictatorial "legislative" powers which he as- 
sumed had been conferred on him by Congress. 

As was to be expected, the citizens of certain countries, 
particularly of the so-called Great Powers, refused to submit 
to the procedure above described; and their attitude was ap- 
proved, if not suggested, by their respective governments. It is 
futile to argue that Mexico can ever declare estopped from seek- 
ing relief otherwise those persons who refuse to resort to the 
procedure prescribed by the Carranza government. Such a de- 
claration would be wholly nugatory. Foreign governments will 
prosecute through diplomatic channels the claims of their 



— 62 — 

citizens, and the Mexican government will sooner or later have 
to admit that it is neither proper nor possible to decline to fulfill 
international obligations or to refuse to adopt procedure sanc- 
tioned by the practice of nations, including Mexico herself. 

Mexico has not once but on several occasions accepted 
the establishment of special boards, known by the name of 
Mixed Commissions, created by diplomatic conventions executed 
with the governments of the respective claimants. These mixed 
commissions act as judicial bodies, and their decisions are final, 
both for the governments creating them as well as for the in- 
dividuals who file their claims before such special bodies. This 
precedent is binding on us; and no reason can be adduced why 
we should not submit to what is" a universal practice and what 
has been authorized by former Mexican governments of un- 
questionable patriotism and respectability. 

It is meet that the claims of our own citizens should be 
submitted for examination and liquidation to special procedure 
provided by law, not by the whim of the Executive; but the 
Mexican Government lacks the means whereby to compel foreign 
governments to abandon, with regard to their citizens, the system 
that has been applied in analogous situations. 

We are not unaware of the fact that the circumstances of 
the present case present peculiarities which will influence the 
organization and operation of the claims commissions. In the 
first place, the question is one not of the claims of citizens of 
a single country, but of those of numerous foreigners of 
various nationalities. It will likewise influence greatly the aspect 
of this problem if we consider the attitudes that have been 
assumed by the different governments of the world, to which 
the claimants belong, with regard to the internal affairs of 
Mexico. This attitude must be carefully weighed in order 
to determine how far, in certain cases, the principle of the re- 
sponsibility of the Mexican people for damages growing out 
of situations created by one or more of these governments can 
be accepted as the standard. Lastly, it cannot be denied that 
Mexico has the right, in turn, under well recognized principles 
of international law, to formulate claims against foreign govern- 
ments, either directly or on behalf of its nationals, or to request 
certain foreign governments to become parties to certain claims 
against Mexico, so that they may be heard in the controversy 
and abide by its results. These complications arising out of 
extraordinary circumstances, well known to all, will make the 



— 63 — 

international conventions setting up the mixed commissions and 
their rules of procedure particularly laborious. However com- 
plicated these conventions may be, reliance must be placed on 
the spirit of justice of the interested governments and on the 
efficiency of our Department of Foreign Affairs, so that a formula 
may be found at one and the same time safeguarding the dignity 
of Mexico and protecting the legitimate interests of other nations 
and of their citizens. 

We do not deem it desirable to enter into further details 
on this matter, in view of the international aspect involved, af- 
fecting as it does not only pecuniary interests, but the sensi- 
bilities and susceptibilities of various governments, including 
our own. We confine ourselves, therefore, to the formulation 
of the general principles which must govern the disposition of 
this subject. 

We recognize that, as the result of the disorder in our country 
during the last ten years, the Mexican people have incurred certain 
pecuniary responsibilities. We must not evade the payment of these 
responsibilities, provided they conform to the principles of inter- 
national law and to our own internal legislation. 

The Federal Congress should enact a law setting forth the 
conditions under which claims of nationals are to be examined and 
liquidated. To this end, we recommend the creating of a Liquidation 
Commission, to which it will be compulsory to present all claims 
for damages, it being understood, however, that the decisions oí 
the commission may be taken to the federal courts, in accordance 
with procedure prescribed by law. 

If foreign claimants voluntarily submit to the procedure out- 
lined above, it will be understood that they thereby waive all right 
to file their claims before the mixed commissions to which reference 
will be made hereafter. 

Our Department of Foreign Affairs should open negotiations 
with foreign governments whose citizens hold claims against the 
Mexican Government, according to the information now in the pos- 
session of the department. The main purpose of these negotiations 
ought to be to establish international tribunals or mixed commissions, 
— formed by representatives of the Mexican Government and of 
the interested foreign governments, — to determine by judicial pro- 
cedure the validity and amount of each claim. 

An effort is to be made to extend the jurisdiction of these 
commissions to the claims formulated by Mexican citizens or the 
Mexican Government, arising out of acts of foreign governments or 
authorities relating to the political situation of Mexico in the last 
ten years. 

In determining the validity of these claims, the mixed commis- 
sions must take into account not only the general principles and 
precedents of international law, but the special principles and 



64 — 



precedents of each of the claimant countries, whenever it shall have 
invoked them in analogous cases by way of defense. 

Payment of claims against Mexico is to be satisfied by the type 
of security and under the conditions to which the claimant govern- 
ment shall have previously given its assent. The claims of Mexican 
citizens might well be paid in bonds of a special issue. 

The Government may enter into private arrangements with public 
utility corporations in connection with the payment of damages for 
the seizure of their properties or for injuries caused thereto. It ought 
likewise to enter into agreement with the former banks of issue, as 
suggested in another chapter. 



XII 
PUBLIC HEALTH 

NO PROGRAM for the rehabilitation of Mexico would be com- 
plete without reference to the problem of public health. In 
order to visualize its magnitude it will be enough to say that the 
mortality of children under one year of age exceeds forty per 
cent, and that in the very capital of the Republic, its great centre 
of wealth and culture, the mortality rate reaches forty-two per 
thousand, a figure not equalled by the most unhealthy cities in 
the world. 

It would be a vain delusion to imagine that these conditions 
can be radically modified through governmental action exclu- 
sively. The first reason for our high mortality lies in the squalor 
in which the great mass of our people live. So long, then, as 
the economic situation of this majority is not materially changed, 
little can be done to diminish the high mortality rate. And yet, 
however small the effectiveness of official action, it must not be 
withheld nor fail to be exerted to the fullest extent, if we are 
to save the lives of so many human beings who under other con- 
ditions might live in normal comfort. 

In addition to the fact of its sparse population, Mexico re- 
ceives no considerable influx of immigrants, who have contributed 
toward the greatness of other nations of the American continent. 
For this reason, our country to an even greater degree than 
other nations, has to conserve its human energies. Therefore, 
we see the importance of social action in the most active form 
possible in the field of public and private hygiene. 

Mexico has sound laws on this subject. The Sanitary Code 
of the Federal District and Territories is in large part an excellent 
codification fully in keeping with modern thought. The difficulty 
lies in its proper enforcement, because of the lack of pecuniary 
resources, — which are always niggardly appropriated for such 
services, — and because, moreover, the great mass of the people 
are wholly ignorant of the most elementary rules of hygiene, and 
resist their enforcement in every way. 

One of the chief causes of our appalling mortality — which 
has been termed by an eminent Mexican hygienist a shame and 



— 66 — 

a blot on our civilization, — is the enormous frequency of gastro- 
intestinal diseases, due mainly to the poor quality and even 
inferior preparation of foods. The government can contribute 
to reduce this cause of mortality, through the inspection of sup- 
plies, the supervision of markets, and the teaching of hygiene in 
and outside the schools. 

The condition of the dwellings in which a majority of the 
Mexican people live contributes to the high mortality rate. We 
appreciate the practical difficulties of enforcing the laws already 
on the statute books in this respect; but the matter is of such 
importance that we cannot fail to refer to it. 

It should be observed, furthermore, that few of our cities 
are equipped with water reservoirs, and with city and house 
drainage, such as is required by the principles of modern science. 
There is probably not a single pavement in the republic which 
does not show defects prejudicial to health. 

The public hospital service cannot be in a more deplorable 
state. These and other deficiencies have been increased as 
the natural result of our domestic disorders and particularly 
because the Carranza administration disorganized and corrupted 
existing branches of the service. 

Lastly alcoholism, and especially the harmful character of 
some of the intoxicating beverages so freely used by our masses, 
comprise another important factor in the high mortality rate and 
in the degeneration of the race. 

Even had we the necessary technical knowledge to formulate 
specific recommendations on this topic, we should not attempt 
their discussion. Questions of hygiene and public health are to 
be settled according to scientific principles and not with reference 
to the exigencies of political expediency. If we have alluded to 
these matters, it has been only to call attention to the impera- 
tive requirement that the State deal with this national problem, 
displaying greater intelligence and vigor than heretofore. 

The problem of public health offers another aspect which 
cannot be overlooked, since the main and dominant aim of any 
constructive program must rest, as we said in our preamble, on 
assuring to the people adequate nourishment. In considering 
the agricultural problem of Mexico, we refer to extensive tracts 
which because of their great fertility ought to draw a large num- 
ber of farmers. We also dwell upon their contribution in an im- 
portant extent toward the production of the staple foods necessary 
for domestic consumption. In this statement we allude to the 



— 67 — 



regions of our torrid zone, which are so unhealthy that not even 
the natives escape the scourge of endemic diseases. It is not 
to be wondered at, therefore, that the density of population in 
these zones should be so small and that their yield of crops is 
in no way proportionate to their fertility, or much less, to the 
extent of arable land. 

Improved sanitary conditions in these important portions 
of Mexican territory, the fight against insects that transmit deadly 
germs, the construction of drainage works, and instruction 
of the inhabitants of those sections as to the advantage of 
complying with certain well-tried rules of hygiene, — these 
policies would tend to transform the regions in question, and, 
in large measure, solve the problem of an adequate food supply. 

As a mere first step in this direction and for the other pur- 
poses which in this regard pertain to the State in a program of 
social action, we submit the following conclusion: 

An executive department should be created to be known as the 
Department of Pubhc Health and Charities, which shall be the agent 
of the federal government in carrying out an energetic and active 
campaign on behalf of public sanitation. 



XIII 
DEVELOPMENT OF OUR NATURAL RESOURCES 

THE NATURAL resources of Mexico, which have earned for 
us the reputation of being one of the richest countries in 
the world, do not amount to more than potential wealth which 
we Mexicans cannot develop to any appreciable extent, if we 
rely solely on our own efforts. In order that these resources 
may be so utilized as to become a factor in the economic world 
situation, we need extensive amounts of capital which Mexico 
lacks, as well as technically trained men whom we are only 
now beginning to form. We must recognize, in view of the un- 
broken experience of the last forty years, that it is to foreign 
cooperation that we owe these two indispensable factors. We 
shall continue to need this cooperation for many years to come, 
if we are not to lag behind other nations of the American con- 
tinent with natural wealth comparable to ours. 

Furthermore, we can neither shun certain duties of human 
solidarity imposed upon us by our world position, nor seek to 
evade the action of certain economic laws, as inexorable in their 
effects as are the laws of nature. Were it nothing more than 
to serve our selfish advantage, we ought to satisfy the require- 
ments of other nations, so far as our resources will allow and 
the demands of world industry and trade require. 

Mexico has already begun to play a role of primary im- 
portance in this regard. The fibre known as sisal {henequén) 
used in agriculture, is almost indispensable in world wheat 
production. Our mines of silver, gold, copper, lead, zinc and those 
of the other industrial metals, give Mexico an important place 
among mining countries, and probably the primacy so far as 
silver is concerned. Lastly, the wealth of our recently discovered 
oil lands has been a factor in bringing about an evolution, almost 
an industrial revolution, because of the new applications of 
petroleum and its derivatives. 

What part is the State called upon to play in the face of these 
phenomena? It is our conviction that the first premise of a 
sound policy in the matter of our mineral production is that of 
placing no obstacles in the way of free action on the part of 



private initiative in the development of these sources of wealth. 
Indeed, the great progress achieved by Mexico in this field dur- 
ing the last generation was due to private initiative, which did 
not encounter any obstacle created by public authority. Con- 
trary to the statements made by persons ill-informed, the admi- 
nistration of General Diaz merely afforded the mining, smelter 
and oil industries strong moral support, in reality less than that 
given to other industries, such as the textile industry, which 
flourished by tariff protection. The exemptions from future or 
contingent taxation and from import duties on machinery and 
equipment designed for development work, such as were com- 
monly granted to smelters and companies engaged in the oil 
industry, constituted an insignificant manifestation of liberality 
when compared with the benefits that these companies confer- 
red upon the country and the public treasury. The chief com- 
panies to whose efforts our great production of oil is due operate 
lands which have not been the object of any concession from 
the State. 

Nevertheless, it is our judgment that not even the above 
form of official protection should in the future be given to these 
industries, which are now firmly rooted in Mexico. This protec- 
tion, more than an aid, was a kind of stimulation that is now 
wholly unnecessary. This is confirmed by the manifest fact 
that these industries have prospered through the natural action 
of economic forces, despite the fact that the Carranza adminis- 
tration substitued the policy of extortion for that of encourage- 
ment. We are naturally far from recommending the former 
policy; but it has at least served to demonstrate that when a 
field of productive activity is once incorporated into the com- 
plicated economic structure of the world, it grows and prospers, 
even in the face of artificial obstacles of a policy unfriendly to 
the free display of private initiative. 

The first condition, then, which the policy of the govern- 
ment should satisfy in this regard is that of affording full 
guarantees to private initiative, free from special protection or 
favoritism. Again, it is our conviction that as to those resources 
which are the natural product of the Mexican territory and 
which, when once extracted, can not again yield their product, 
the government, for the good of the nation, ought to participate 
directly in the profits derived from their extraction. It is our 
judgment that the fairest method of assuring this participation 
is to levy special taxes, proportional and equitable, to use the 



— 71 — 

language of the constitution, computed on the prices prevaiHng 
either at the place where the products are obtained or at the 
port of shipment. 

While condemning the principle of intrusion estabUshed 
by the Carranza administration under Article 27 of the con- 
stitution of Querétaro, we recognize as inherent in the State 
the power and duty of seeing that our natural resources are 
not wasted and that they are applied as far as possible to 
promote our domestic economic development. 

Intervention by the State is indispensable in certain lines, 
in order to prevent unnecessary waste, which is criminal if the 
needs of future generations and the economic and political ad- 
vancement of Mexico are to be taken into account. 

No one may properly deny that rights acquired under pre- 
existing laws should be recognized by the State no less than by 
the individual; but this principle must be made to accord with 
that of the exercise of the police power of the State, which 
increases in scope as the phenomena of life become more and 
more complicated. The constitution of Querétaro, distorting this 
principle, violates private rights and establishes the absolute 
predominance of the State at their expense. Confining our views 
solely to the question of petroleum, which has given rise to a 
complex problem, domestic and international in character, we 
affirm that the nationalization of this source of wealth, to the 
disregard of rights defined by laws of unquestionable validity, 
is a measure which not only violates the rights of the individual, 
but also is of no benefit to the community, as we shall fully 
demonstrate. 

The only reason that might possibly be invoked to justify 
the nationalization of petroleum deposits is the necessity of 
preventing their early exhaustion; and indeed Article 27 of the 
Querétaro constitution implies the action of the State as the 
means of conserving this national wealth. This is the true na- 
tional interest. Nevertheless, the administrations that have 
exercised power in Mexico under the last-mentioned constitution 
have not hesitated to place oil deposits on the same plane as 
metaliferous bodies, whose legal status has been defined by 
century-old laws. However, inasmuch as these laws were not 
inspired by the motive of conserving the mineral deposits, but 
rather permit their development without let or hindrance, the 
conclusion is forced upon us that the enactments now in force 
in Mexico concerning the development of petroleum are devoid 



— 72 — 

of serious economic purpose, and have no practical value from 
the point of view of national interest. 

Much has been made of the argument that the oil develop- 
ment benefits only the foreigner; and a new motive is afforded 
for the scheme of nationalization on the assumption that it 
will serve to prevent this result. We do not believe that the 
theory that the development of petroleum benefits only the 
foreigner can be honestly sustained. The country also obtains 
certain advantages, either indirectly through the payment of 
wages, the technical training of our workmen, the erection of 
permanent improvements, and the increase in the general volume 
of trade, or directly through the payment of substantial taxes 
into the treasury, and of large rentals and royalties to Mexican 
landowners. Be this as it may; we must recognize that this 
wealth lay for years and centuries at the exclusive disposi- 
tion of the inhabitants of Mexico and that they did not turn it 
to account, in fact did not even discover it. It is small wonder, 
then, that the discoverers, those who with their capital and 
their energy brought about its development, should demand Ihe 
chief share of the profits of what we failed to make any use 
by our own efforts. 

In Mexico, mining, to the legal status of which it is sought 
to bring petroleum, is almost exclusively in the hands of for- 
eigners. This should have convinced the Carranza administra- 
tion of the impossibility of conserving the oil fields in the hands 
of Mexicans and for the chief benefit of the Mexican people by 
merely making them subject to the provisions of the mining law. 
Furthermore, it is public and notorious that the concessions for 
the development of petroleum granted by the last two govern- 
ments to Mexican citizens, — some of them persons high in ad- 
ministration circles, — have merely been peddled by the conces- 
sionaires among foreign companies, thereby discreditin;^; the 
"nationalist" theory invoked as a justification for the policy 
adopted. 

It is distressing to be forced to admit that if the production 
of petroleum has not had its full utilization in Mexico, it is 
because of the state of revolt and attendant insecurity that has 
prevailed for the last ten years. Under these conditions, pipelines 
to carry the oil to our large industrial centres and cities have 
not been laid; for the same reason, but few of our towns have 
asphalt pavements, while highways are to a large extent impas- 
sible. To the same cause, too, may be ascribed the lack in our 



— 73 — 



towns of gas works which constitute an elementary and in- 
dispensable service in cities elsewhere, either by the use of 
natural gas from oil wells, — now going to waste in a shame- 
ful manner in Mexico, — or of manufactured gas. Our now 
almost depleted woods are being wasted, with the conse- 
quent ruin of our arable lands, in order to supply charcoal 
for domestic fuel, when every town of importance in Mexico 
ought to have gas service cheaper, better and more hygienic 
than our primitive and traditional charcoal fuel. Not even 
Tampico, the heart of the oil industry, makes use of this 
fuel gas, for in that city, — paradoxical as it may seem, — fuel 
for domestic purposes costs more than in almost any other town 
in the Republic. Lastly, in order not to make this enumeration 
interminable, our agricultural system might have been trans- 
formed by the use of certain petroleum derivatives in the opera- 
tion of pumps, — which by thousands might be irrigating lands 
that now lie fallow, — had not revolutionists and bandits become 
the daily scourge of all persons living outside of towns. 

Under the conditions here described Mexican petroleum will 
increase steadily in production and will seek foreign markets. 
This result will be due in no small measure to the methods 
devised by the Carranza administration, which the present 
Government continues to apply with as much fervor as candor. 

A sound petroleum policy should, in our judgment, satisfy 
these conditions: respect, in the first place, for rights legally 
acquired and interests legitimately created, thus vindicating the 
fair name of Mexico, which after recognizing in its statutes that 
petroleum belongs to the owner of the soil cannot overturn this 
principle without sacrificing its honor and exposing itself to 
international conflicts; attention to our domestic needs, while 
not disregarding the demands of world trade; and consideration 
and provision, as far as possible, for the future economic and 
political requirements of Mexico. 

We are bound to say at this point, not by way of censure 
but merely in order to record the fact, that neither the Carranza 
administration nor its successor has been able to give evidence 
of comprehending any of these indispensable requirements. They 
have violated the private rights of the owner of the land; they 
have taken no pains to see that petroleum wealth be used in 
Mexico in its varied manifestations and thus become a direct 
and active factor in its progress; still less have they borne in 



— 74 — 

mind that the petroleum will be exhausted in proportion as its 
extraction is intensified. 

It is this latter aspect of the problem which directly de- 
mands governmental action. As to the other aspects, the first 
merely calls for a negative attitude, — a respect for private 
rights, — while the second makes necessary a government which 
will maintain order, and observe an administrative policy of 
strict integrity, thus stimulating the spirit of enterprise among 
the inhabitants of the country. 

Free from hostility toward the large industrial and com- 
mercial nations that are using Mexican petroleum in ever-in- 
creasing quantities in their factories and vessels, our government 
should open its eyes to the significant fact that Mexico is today 
a field of development which is being preferred over other 
countries classified as reserve lands for the future. This devel- 
opment has increased at a tremendous rate. The discovery of 
Mexican petroleum in commercial quantities dates back barely 
fifteen years; today Mexico is the second largest producer 
of petroleum in the world. However much it may be argued 
that our oil resources are barely scratched, it is the part of 
wisdom to provide for the day when this wealth may be 
exhausted. 

It would seem, then, as if the Government should be con- 
vinced of the urgency of controlling the extraction of our mineral 
oil by wise regulation. But the Carranza government, and 
even more so the present administration, have adopted the policy 
of forcing extraction to the very limit, without any regard to the 
future needs of the country. The petroleum decrees and other 
regulations now in force do not aim at regulating development; 
they sanction the spoliation of legitimate rights while inviting 
undue exploitation — a veritable waste of a source of wealth 
that can not be replaced. The system of concessions and "de- 
nouncements" is directed straight at this result; and if it has 
not yet occurred, it is due to causes foreign to the policy of the 
Government, such as the lack of pipelines to carry petroleum 
to the ports and the shortage of tankers to transport it abroad. 

Few practices of former governments were so bitterly de- 
nounced by the Carranza revolution as the granting of conces- 
sions for the development of the nation's resources. Neverthe- 
less, we have already seen that the governments emanating 
from this revolution have granted countless concessions for the 
development of petroleum, and have even created what might be 



75 



called "huge oil land holdings", more open to criticism from the 
economic point of view and more pregnant with future grave 
dangers than the agricultural land holdings so harshly stigma- 
tized in the revolutionary literature and legislation. 

The most striking thing in this connection is that this pro- 
cedure has been established without any law to sanction it. The 
Executive branch has arrogated to itself the right to substitute 
the will of the legislator. By mere administrative rulings the 
Executive has, in fact, interpreted an entire principle of the con- 
stitution—Article 27 — while secretaries of department dispose 
of the resources of the nation with more recklessness than if it 
were their own patrimony. 

It is natural, an even legitimate, that individuals and oil 
companies should develop petroleum deposits on as large a scale 
as possible; but what is permissible in the case of an individual 
or of a company organized for purposes of commercial gain 
may not be permissible to a government charged with safe- 
guarding the nation's interests, and of which it is the duty to 
look beyond the life of the generation to which the men in power 
at any given moment belong. True it is that we do not know 
what the future holds in store for us in the matter of fuel, nor 
whether future discoveries will thrust petroleum for the pre- 
eminent position it now occupies. Until such events occur, how- 
ever, it is the primary duty of the government to guarantee the 
conservation of this source of wealth. Merely to provide for 
temporary enrichment, at the risk of the welfare of future genera- 
tions, is not the work of statesmen nor of patriots. 

How, then, can the public interest, the national interest, 
be brought into accord with that of the individual? What formula 
can be devised to harmonize a sound policy, such as we conceive 
it, with the proprietary rights of the owner of the soil defined 
by our civil laws? We are not so vain as to believe that we have 
discovered this formula. But true to our purpose of honestly 
expressing our views on the national problems, we must submit 
the method which, in our humble opinion, can bring into harmony 
positions apparently irreconcilable. 

The so-called policy of nationalization is, we have already 
said, the deliberate endorsement of spoliation. To despoil is an 
illicit act. It is not illicit to limit the exercise of the right of 
property when, interpreted in the light of the vast scope given 
to it by civil laws, such property right is incompatible with the 
rights of the community. Theodore Roosevelt embodied this 



— 76 — 

principle in the following vigorous formula: "When property 
rights conflict with human rights, property rights must give way." 

it would be repugnant to the modern concept of social 
justice for the owner of a forest or of an oil well, in the exercise 
of the absolute ownership guaranteed to him by civil law, to 
believe himself authorized to set fire to this forest or this oil 
well, merely so that he might gratify himself at the sight of 
an imposing spectacle. Such an act would be regarded as a 
violation of the rights and interests of society, and no law which 
forbade and punished it could be held as unjust. Mexico, to- 
gether with all civilized countries, has on its statute books 
laws and administrative regulations forbidding the destruction 
or wanton deforestation of privately-owned forests, and no one 
questions the legitimacy of these provisions, even though they 
abridge the control of owners. All the more, then, may the 
State enact laws restricting the exploitation of those sources of 
natural wealth which are not replaceable, such as petroleum. 

All these laws have as their basis the harmonization of the 
rights of the individual with those of the community, and are 
a manifestation of the police power which pertains to the State. 
In the exercise of this function the legislator may, and in our 
opinion should, hold in reserve those oil-bearing districts that 
have not yet been discovered through private initiative, and refuse 
10 open them to active operation. The already known oil districts, 
whether developed or not, should be respected, so as not to 
violate a present right, not merely a contingent right, such as that 
of the proprietor who as yet does not know of the existence of 
petroleum on his lands, and has not performed an act indicating 
an intention of making use of such petroleum. There is an un- 
questionable difference between the one situation and the other. 
Accordingly, a limitation established by law in the latter case 
would not injure vested rights. Let it be noted that we speak 
of limitation not of spoliation, and of the limitation of a right 
that is merely, after all, an expectancy. 

If in the exercise of its police functions the State may, on 
conditions prescribed by law, limit the enjoyment of private 
ownership, it may, likewise, in satisfying the public interest, set 
the time when a particular source of wealth, — the immediate 
enjoyment of which the civil law leaves to the individual,- — may 
be opened to exploitation. Accordingly, the reserve lands should 
be opened to development when the law provides, the respective 



— 77 — 

owners always enjoying the preferential right to engage in this 
development. 

The policy we have outlined conforms wholly with the 
principle of Article 27 of the constitution of 1857 which clas- 
sifies respect for private property as one of the inherent rights 
of man; for no sound doctrine of constitutional law denies to 
the legislator the power to limit and regulate the enjoyment of 
such property, as required by public interest. If the public 
interest demands, as is unquestionably the case in the situation 
under consideration, that petroleum resources be developed 
without waste and be conserved for the greatest period, the 
State may regulate the development of this source of wealth. 
The constitution of 1917 and the governments existing there- 
under have substituted for the power of regulating the enjoy- 
ment of private property that of depriving the legitimate owner 
of such property, while believing that it is in the public interest 
to force oil extraction as much as possible. It will be seen, then, 
that the policy we recommend is diametrically opposite to that 
of the present Mexican Government. Our policy is constructive; 
that of the Mexican Government destructive. 

We have considered this matter at some length not only 
because it is the subject of constant and bitter discussions, but 
also because of its intrinsic importance. We shall now formulate 
the conclusions, which, in our judgment, should form part of a 
program of governmental action in the problem of the develop- 
ment of the natural resources of Mexico. 

We believe that in the matter of the development of our natural 
resources the legislator should be guided by the purpose of harmoniz- 
ing the rights and interests of the individual, as deñned by civil law, 
with the rights and interests of the Mexican people. 

We do not believe that the strictly mining legislation, as it 
existed under the 1857 constitution, requires, at present, any sub- 
stantial modification; but we denounce, as a violation of private 
rights and as contrary to national interests, the application of this 
system of legislation to oil bodies or deposits. 

The exploitation of petroleum measures should not be left ab- 
solutely to the will of the landowners and of lessees thereunder for 
the following reasons. In the first place, petroleum is a natural 
product of the soil, not capable of reproduction; secondly, it is a 
substance of primary importance in the economic development of 
Mexico ; and, lastly, it is being exported in ever increasing amounts 
to meet the constantly growing demands of world trade and industry. 
It is the paramount duty of the State, in view of these phenomena, 
to intervene in the exploitation of petroleum. This intervention 
should have a two-fold aim: (1) Enactment of regulations of de- 



— 78 



velopment which shall prevent the waste of the products extracted; 
(2) Provision for the future needs of the Mexican people through 
the creation of oil reserves which shall secure for periods of suc- 
cessive years, and for as long a time as possible, the enjoyment of 
this source of wealth. 

In order to carry out this latter purpose, we recommenti that 
the National Geological Institute undertake to locate the greatest 
number possible of oil-bearing districts, which have not yet been 
opened up to prospecting or exploitation by private individuals or 
companies. The districts thus designated should be closed to im- 
mediate exploitation, and should only be o[3erated successively and 
as determined by law. 

So soon as a district is reserved, the government should seek to 
reach an agreement with the owners of the land within such district, 
with a view to acquiring for the Nation the right to develop petroleum 
within the circumscribed areas. Owners failing to reach an agreement 
with the government may, however, operate on their own account 
or contract for the development with others, so soon as the district has 
been opened to exploitation. Should they fail to exercise this right 
within the period set by law, the government may order that the 
area in question be opened to active operation, on the ground of 
public welfare (utilidad pública), and the right of development granted 
under terms prescribed by law. In such event, and in the absence of 
an agreement between the operator and the owner as to the com- 
pensation to be enjoyed by the latter, the former shall pay him 
an amount equal to the value of 10 per cent of the output. 

We regard the system of '"denouncements" and concessions to 
develop oil deposits as contrary to the national interests, and often 
in violation of property rights. Inasmuch as Congress has not enacted 
the law to carry into effect Article 27 of the constitution of Que- 
rétaro, the "denouncements" and concessions have no legal basis, 
even when measured by the standard of this constitution. They 
afford, furthermore, a pretext for immoral speculation, and for 
rewarding political services at the expense of the nation's resources; 
and, lastly, they form an incentive to waste a substance that it is 
imperative to conserve for the greatest period possible, for the good 
of the whole people. 

The development of which the oil industry is susceptible, the 
preponderant part which foreign companies and even foreign govern- 
ments play in its exploitation, the technical character of the ex- 
ploitation, and, lastly, the national interest involved, render it ex- 
pedient that this whole matter be subject to a uniform policy 
throughout the Republic. We therefore think it necessary that the 
federal constitution should vest in the federal authorities the ex- 
clusive power to intervene in this industry. 

We favor the levying of special taxes on the mining industry 
and on the production of petroleum. These taxes should be neither 
oppressive nor confiscatory, but should be established bearing in mind, 
among other factors, the hazards and uncertainties to which capitals 
invested in such enterprises are exposed. We believe that the fairest 



— 79 — 

basis for the imposition of these special taxes consists in assessing a 
certain percentage of the value of the products either at the place 
of production or at the port of shipment. The federal congress 
should be exclusively charged vi^ith the levying of such taxes; but 
an equitable portion should be ceded to the respective states and 
municipalities. 

With regard to our timber lands, we recommend that the federal 
and -state governments, within their respective spheres, enact and 
make effective provisions forbidding the destruction of forests and 
encouraging the growing of new woods. The federal and state 
governments, and the municipalities should set apart public lands in 
sufficient amount for the growing of woods, and, in general, for the 
planting of trees. The federal government should be authorized 
by law to expropriate, for reasons of public welfare and with 
compensation, such wooded tracts as it may be advisable to reserve, 
while at the same time so regulating their exploitation as to assure 
their conservation. 

We condemn the system of favoritism almost universally followed 
by Mexican governments in the granting of concessions to develop 
the public domain. The laws on the exploitation of timber lands, 
resin, rubber, and other natural products on national lands, and those 
relating to hunting, fishery, exploitation of saltbeds, and, in general, 
to the enjoyment of natural resources, should be amended so that the 
granting or refusing of concessions, and the fixing of the portion to 
be paid to the State for the privilege of development, should not be 
left to the will of the Executive. Concessions should be granted on 
terms to be fixed by law, and adjudicated in public auction, taking 
as a point of departure for the compensation to be paid by the 
concessionaire the minimum amounts established in the respective 
schedules. 



XIV 
ECONOMIC AND FINANCIAL PROBLEMS 

THE STUDY of the economic and financial problems of 
Mexico, constituting one of the most important aspects 
of the general problem of reconstruction, calls for accurate data, 
which, unfortunately, no one has in sufficient volume. The 
figures available are, to a large extent, hypothetical, for many 
reasons, among which may be cited the neglect of all statistical 
compilation during the Carranza administration. 

The subject under consideration presents two phases: 

(1) The liquidation and payment of the national debt; and 

(2) the reorganization of domestic credit and the readjustment 
of the factors of production. 

The national debt may be divided into two parts: (1) That 
portion incurred before the revolution; (2) That portion growing 
out of the revolution. The former is susceptible of liquidation 
by simple arithmetical operations; the liquidation of the latter 
calls for the establishment of an equitable scheme which the 
law should precribe. 

As to the former, if we follow the classification generally 
adopted, we must divide the obligations into internal debt, 
foreign debt, and debts guaranteed by the nation. All these 
debts are increasing daily through the accumulation of interests 
accrued and outstanding. Nevertheless, it is advisable to present 
certain figures so as to give an idea of the burdens, as to which 
there is no question, which weigh on the Mexican people. 

The newspapers of Mexico City published on July 1st, 1920, 
the following statement from the Treasury Department: 

Internal Debt 138,795,550.00 pesos 

Foreign Debt 286,944,251.37 " 

Total 425,739,801.37 " 

or 212,869,900.69 dollars 
Interest on both debts calculated to July 

1 St, 1 920 1 22,509,667.5 1 pesos 

or 61,254,833.76 dollars 



— 82 — 

Accordingly, Mexico owed on July 1st, 
192Ü, merely for the two items 
above specified, according to of- 
ficials figures _ _ 548,249,46'8.88 pesos 

or 274,124.734.44 dollars 

Tlic preceding amount is dece|nive, since it omits entirely 
the 1913 loan. Lack of information precludes our fixing the 
exact amounts received on account of this loan, the bonds of 
which are for the most part held by foreigners. A fair estimate, 
however, of these bonds, including accrued interests, exceeds 
150,000,000 pesos, or 75,000,000 dollars. 

Furthermore, there is the debt growing out of guarantees 
assumed by the Federal Government which must be paid. This 
has been computed by the Federal Treasury (as of April 1st, 
1913), at 4,072,700 pesos or 2,036,350 dollars; but this amount 
only included obligations of the different States guaranteed by 
the Federal Government. To this sum we must add interest 
charges, the amounts represented by the mortgage bonds of the 
National Railways which the government guaranteed, bonds of 
the Vera Cruz-Isthmus Railroad, and bonds of the Farm Loan 
Board (Caja de Prestamos para Obras de Irrigación y Fomento de la 
Agricultura). And to all of the foregoing must be still further 
added what is due on the so-called Pious Fund of California. 

Based on the items enumerated in the foregoing para'^raph, 
we calculate that the responsibility of the Mexican nation on 
these lines amounts to approximately 500,000,000 pesos or 
250,000,000 dollars. If we add the aggregate of the so-called 
internal and domestic debts, it is reasonable to assume that at 
the time of writing (August, 1920), the total obligations growing 
out of the items specified in the preceding paragraphs aggregate 
not less than one billion two hundred million peses, cr 
600,000,000 dollars. 

In addition to these debts, there is that growing out of 
the responsibilities caused by the various revolutionary move- 
ments since November, 1910. The highest will unquestionably 
be those occasioned by the seizure of funds of the banks and totaf 
ruin of their business; those arising out of the seizure of railroad 
lines and destruction of permanent property and rolling stock, 
and lastly, out of the seizure of properties belonging to nationals 
and foreigners. It is impossible to estimate even approximately 
the amount of this obligation. One item, alone, that of cash 



83 — 



taken manu militari from the vaults of the banks, amounts to 
54,000,000 pesos or 27,000,000 dollars, according to official 
figures of the Carranza government. 

In August, 1919, the Secretary of the Treasury of the 
Carranza government gave a statement to the press to the effect 
that the national debt, for the various items already enumerated, 
— debt in the narrower sense of the term, obligations growing 
out of seizures, forced loans, damages, etc., — amounted at that 
time to one billion pesos, or 500,000,000 dollars. Unfortunately 
this figure is much below the real figure, for we have seen that 
the responsibilities of the Mexican nation merely on the score 
of contracts executed by the government, and without taking 
into account the heavy burdens which the revolution has left 
upon the country, amount to more than the billion pesos acknow- 
ledged by the Secretary of the Treasury. 

In our enumeration of the items of responsibility growing 
out of the revolution, we have purposely refrained from alluding 
to those proceeding from the issues of so-called paper money. 
This matter involves grave questions of a moral and equitable 
order, into which we can not enter here. We shall point out, 
however, that these responsibilities, in case they exist, will be 
found, we think, to be far less than the amounts usually quoted, 
and than what speculators expect. 

Let us now consider how we can meet our debt, in the 
strict sense of the term, that is, the financial obligations of the 
government as represented by legally issued securities now in 
the hands of the public. 

We do not believe that the productivity of Mexico has in- 
creased in the last few years. The cattle industry has been 
reduced to the furthest limits possible; agriculture suffers be- 
cause of the destruction of working material, because of the 
active emigration of farm laborers to the United States, because 
of insecurity in the fields and because of the heavy burden of 
new taxation; sisal (henequén), which constituted a valuable 
source of revenue, is now passing through a crisis, the outcome 
of which no one can foretell; the mining industry has suffered 
from the state of domestic disorder, and if the apparent results 
of mining development have not been wholly unfavorable during 
recent years, this is to be attributed not so much to an increase 
in output, as to the high prices obtained for some metals, 
especially silver, as the result of conditions wholly foreign to 
our domestic situation; almost all the lines of communication 



— 84 — 

which bring the factors of production into play, have run down 
and lack rolling stock, being at the same time subject to frequent 
interruptions and to the military needs of the government. The 
only source of wealth that has prospered, and which, therefore, 
constitutes an important source of revenue, is petroleum. 

It is a fact that the revenues of the federal government 
have grown considerably, due to a substantial increase in 
existing taxes, and to the creation of new ones; but thus far 
the legitimate and illegitimate needs of the government have 
been a whirlpool which has swallowed up the largest revenue. 
To this we must add that in the chaotic administration of the 
public finances during the days of Carranza, substantial sums dis- 
appeared from the public treasury, without any accounting having 
been made; while it is reasonable to assume that many sums 
which should have been paid into the national treasury never 
found their way there. 

So long as these conditions prevail, it will be useless to 
talk of settlements with our creditors. We stated in the preamble 
of this document that the basis of all governmental labor must 
be integrity, particularly in the handling of public funds. The 
government that succeeded the Carranza regime announced 
its purpose of purifying the financial administration; but 
even were these laudable intentions carried out, so long as 
well recognized methods based on the laws of economics applied 
to our needs do not take the place of measures inspired by 
a purely opportunist policy or by the whims of the Secretary 
of the Treasury, the distrust of our creditors with regard to the 
Mexican government and people will continue to be an insuper- 
able obstacle in reaching any settlement of our public debt which 
shall prove advantageous and decorous. 

We trust that the government will be convinced of the 
truth of this statement, and that it will be capable of implanting 
in the Treasury Department methods based on scientific princi- 
ples and on absolute probity. With this premise we shall briefly 
analyze the problem from two points of view: First, a settlement 
with our creditors; and secondly, a stimulation of the produc- 
tivity of Mexico. 

It is frequently said that Mexico imperatively needs a heavy 
loan to liquidate its debts and restore its credit. In our judg- 
ment there is no plan more difficult of realization nor more 
antipatriotic. 

The hopes of the present creditors of Mexico are, whether 



85 — 



or not they so will it, bound up in the fate of the country. 
Bonds of the Mexican public debt are hardly quoted on the 
markets of the world, and if they are, it is at ludicrous rates. 
It is reasonable to assume that the majority of them are held 
by bankers or speculators who have been able to accumulate 
them and patiently await the moment of liquidation. It would 
be a matter of satisfaction for these two classes if Mexico were 
to resume the payment of her debt, even though the govern- 
ment only began by meeting a fractional portion of its obliga- 
tions. However painful it may be to have to make the admission, 
the fact remains that Mexico is bankrupt. Mexico is a debtor 
with enormous possibilities, but with most discomforting present 
conditions. Her creditors cannot be reconciled to the idea that 
the payment of present day credits be post-poned for the benefit 
of future generations, and if they are benefited by Mexico's 
resumption, even though partial, of her public debt service, 
their state of mind must be very different from that of a new 
creditor who is approached for funds at the moment of bank- 
ruptcy. If the new creditor risks his money it will be on the 
double basis of a very high rate of interest which would con- 
stitute the premium on the insurance, as well as the interest 
properly speaking on the capital, and some humiliating guaran- 
tees to which no self-respecting Mexican government could 
accede. 

Furthermore, it should be borne in mind that the present 
time is the least propitious for Mexico to enter the market in 
search of a loan. The French government has just contracted 
loans at a rate higher than its nominal rate of 8 per cent; while 
the British government is compelled to pay higher rates of in- 
terest than it has ever paid at any time in history. 

Accordingly, the only honest, logical and practical solution 
for Mexico and her creditors is that the government should invite 
them to enter into a settlement, based on absolute good faith 
and a sincere readiness to pay, up to the very last cent which 
it is physically possible to pay. 

It would neither be proper nor acceptable to her creditors 
if Mexico were to reduce the interest rate accruing on the debt, 
so as to make it possible immediately to resume payment of this 
service. What the strictest equity requires is that, on the basis 
of the rate of interest stipulated in the various contracts, an 
aliquot part of the interest due on the various certificates of 
indebtedness be paid, the balance being left as deferred interest. 



— 86 — 

Then year by year, or in periods of two to four years, as the 
country recovers its vitality, the portion of the interest paid 
would be increased under agreements between the government 
and representatives of the creditors. Later, so soon as the 
interest payments were completely satisfied, the amortization 
of the principal might be begun, unless by that time conditions 
permit a general settlement of the public debt under new condi- 
tions favorable to the country. 

We maintain that this is the only honest, the only patriotic 
course. Should a fresh debt be contracted at this moment, — on 
onerous conditions as would inevitably be the case, — the dif- 
ficulty would only be postponed for a few months. When Mexico 
is unable to meet these new engagements, her credit would reach 
a lower ebb than ever, inasmuch as with our freshly assumed 
new obligations not even the strictest straightforwardness of 
administration could save us from another bankruptcy. 

The need of a loan for the rehabilitation of the railroads is 
frequently discussed. We think that not even for this special 
purpose should new obligations be undertaken, even assuming 
such an operation possible in view of the enormous respon- 
sibilities now weighing on the government with regard to the 
National Lines. What the government should do without delay 
is to moralize the administration of the railroads and to invest 
in their reconstruction that portion of the revenues derived from 
their operation that is now turned into the federal treasury. 
Moreover, we hold that the government should initiate with the 
stockholders and bondholders of the National Railways the 
negotiations we recommend in the preceding chapter on railway 
policy, so as to reach a settlement which shall have the double 
advantage of restoring the efficiency of the railroads and of 
liquidating the responsibilities legally chargeable to the nation. 

The responsibilities which the banking institutions are 
entitled to expect the government to assume by reason of the 
acts of violence perpetrated by the Carranza government may 
be divided into two chapters: Those arising from the seizure 
of funds, and those growing out of the illegal suspension of these 
establishments. Those of the first group must be paid in cash. 
It is our conviction that those of the second category should be 
liquidated through special arrangements, which will depend on 
circumstances which it is not possible now to foresee. We have 
considered this matter more in detail in our remarks on the 
reorganization of our banking system. 



— 87 — 

With regard to the other responsibihty for damages caused 
by our condition of disorder, we ratify what we have already 
said in the chapter on claims. We believe that the law should 
empower the government to issue special certificates to be 
authorized only for such amounts as are decreed by the claims 
commission and the mixed commissions. We do not believe 
it a difficult matter to secure the assent of the governments 
interested in the claims of foreigners, so that payment of these 
amounts may be made in the special bonds to which we have 
referred. These bonds would bear a modest rate of interest 
after a reasonable date — three or five years from their date 
of issue. 

With regard to the second aspect of our economic problem, 
that is to say, the stimulation of the productivity of the country, 
we are not convinced of the efficacy of governmental action as 
the chief factor of this productivity. We are of the opinion that 
the government can, and should, lend its aid, possibly in a more 
intensive manner than it has heretofore attempted to do; and 
to this end are addressed some of the recommendations we have 
made in various chapters of this pamphlet. But the government 
should assume an important function in connection with the 
circulation of public wealth, by means of the only factor which 
can constitute the machinery of such circulation, namely, do- 
mestic credit, establishing to this end a banking system scien- 
tifically conceived and adapted to the needs of the country. 

Merely by way of illustration of the results that may be 
expected from the establishment of a scientific banking system, 
we shall mention here that prior to the adoption of the present 
Federal Reserve System in the United States, the amount of 
money existing in the banks of the country was at times ten 
times in excess of that held by British banks; and yet the banking 
power of the United States was inferior to that of England, 
and the former was constantly compelled to borrow from the 
latter. Since the adoption of the Federal Reserve System, the 
United States have been in a position to meet the tremendous 
financial needs of the European war, to convert the great Allied 
^owers into debtor nations, and later to seek a readjustment of 
their economic situation with less derangement than any other 
nation. 

In reorganizing our banking system, the first essential should 
be the authorization of banks of loans, discounts and deposits, 
the issue of notes, however, being exclusively under the control 



of the government. Banknotes form a part of the circulating 
medium, and the whole monetary system of a nation requires 
the effective control of domestic circulation. Without it there 
is no money, in the proper sense of the term, as the sole measure 
of values in just relation to the needs of circulation. The es- 
tablishment, therefore, of a single bank of issue is imperative. 
This solution was not first conceived at the Constitutional Con- 
vention in Querétaro, for preliminary surveys had already been 
made by former Mexican governments along this direction, and 
even certain initial steps taken. 

The functions of the single bank of issue ought to be twofold. 
In the first place, it must act as a bank of issue and deposit, 
and designed to concentrate and distribute government funds; and 
in the second place, as a bank of rediscount which will not deal 
directly with the public, other than in exceptional cases, but 
with unchartered banks operating throughout the Republic. 
By means of this rediscount and through the instrumentality of 
these banks, the single bank of issue can distribute the benefits 
of credit, facilitating the advantageous use of energies that are 
now directed mainly along revolutionary and destructive lines; 
and at the same time bringing into play forces that now lie 
dormant and of no avail to the common good. 

Heretofore, the strictly commercial credit, that is, the dis- 
count of commercial paper, has been insignificant in national 
banks, to such an extent that on their balance sheets as of 
December 31, 1910, that is to say, prior to the period of political 
disorders, the item of discounts mlade by all the banks in the 
country barely reached the negligible aggregate of 16,315,669.84 
pesos or 8,157,834.92 dollars. This figure represents the greatest 
charge that can be brought against the banking system then in 
force. For if the discounts did not then reach a higher amount 
it was not because there were no persons in Mexico who needed 
to engage in these operations, nor that among these persons 
there were not many deserving of credit. The lack of dis- 
counts was due to two main causes. In the first place, the banks 
dealt directly with the public and monopolized banking opera- 
tions under the shadow of their franchises. There being no in- 
dependent banks, rediscount did not exist; therefore those who 
lacked influence with the managers or directors of banks could 
make no use of their credit and were allowed to fall into the 
hands of usurers who took advantage of their own credit and 
personal influence in the banks to obtain funds, lending them 



— 89 — 

at very high rates of interest. In this disguised form of redis- 
count, the real debtor was unknown to the bank. The second 
reason to which we attribute the negligible amount of discounts 
was that the majority of the debts in favor of the banks, though 
commercial in form, consisted really of long term obligations 
renewed half yearly as a mere matter of form, and which consti- 
tuted the operating capital of agricultural or industrial concerns. 
This situation was such that had an attempt been made to force 
payment on the expiration of the first six months, the result 
would have been a general panic, as was clearly seen by the 
mere announcement once made that the government would re- 
quire the banks to collect these credits. 

These facts show beyond question that the banking system 
established by law was in practice fundamentally misapplied. 

With these circumstances in mind and inasmuch as a bank 
of issue and rediscount, — or single Bank of Issue, as we shall 
continue to call it for the sake of simplicity, — would distribute 
the advantages of credit to all parts of the country, it is to be 
assumed that the real national discount would considerably in- 
crease, and that the resources of the Bank would be much sought 
after in fulfilling this function of domestic circulation. 

It is not to be wondered at that the Carranza government 
did not succeed in three years in organizing the single Bank of 
Issue. A bank is an institution of credit that cannot exist without 
the confidence of the public. The lack of scruples of this govern- 
ment in the handling of public funds and its attacks on private 
property have found expression in one of the greatest evils in 
the country: the complete disappearance of that social asset 
known as credit, the product of moral and intellectual forces 
much more valuable than money itself. 

The subject under consideration is highly complex and 
difficult; its factors are eminently technical, and if we attempted 
to investigate them we should be writing a scientific monograph 
and not a program of governmental action. The considerations 
we have given above seem to us sufficient to warrant the de- 
finitive abandonment of the banking system in force before the 
attacks made against the banks by the Carranza government, 
and the establishment, as the cardinal principle of the new 
system, of a single Bank of Issue, around which there would 
spontaneously spring an indefinite number of private banks to 
act as agents in the diffusion of credit through the valuable 
instrument of rediscount. These banks would be subject to 



— 90 — 

certain rules of publicity which the law would establish and to 
the effective inspection of the government, thereby assuring 
the public the necessary guarantees; but their establishment 
would be wholly free. 

Having indicated this general banking policy, the next step 
is to consider how the single Bank of Issue would obtain the 
necessary capital to begin operations. In the first place, we 
would condemn any attempt to obtain this capital by means of 
a foreign loan, since in this way the Bank of Issue, and to a 
certain extent the Mexican government, would be under foreign 
financial control. Without attempting to outline the steps to be 
taken to obtain the initial capital, — since they would depend 
on the circumstances of the moment, — we would say, that 
the most practical, and at the same time most equitable method, 
would be to allow the former banks of issue preference in 
subscribing to the capital stock of the single Bank of Issue. 
This would be but the natural application of the policy of inte- 
grity which ought to animate the actions of the government, 
since if by virtue of the creation of the Bank of Issue the former 
banks must disappear, — at any rate as banks of issue, — it is 
only just that they should be afforded the advantage of becoming 
interested in the new institution. 

We shall not attempt to enter into the details of the ne- 
gotiations which the Mexican government would have to un- 
dertake with the former banks of issue, since little would be 
gained by speculating on more or less hypothetical conditions. 
The essence of our recommendations rests in that, for the 
mutual advantage of government and banks, an effort be made 
to reach a settlement as to the responsibilities of the Nation 
in favor of the banks, which shall leave them or their share- 
holders directly interested in the single Bank of Issue. A 
condition of any settlement must be, however, that the govern- 
ment bind itself to reimburse the banks in cash for the amounts 
forcibly and arbitrarily taken from their vaults by the Carranza 
government. 

But how can this latter condition be met in the present 
state of the public finances? It would be idle to assume that 
the government could pay out at once the fifty-four million 
pesos that Carranza seized; but we have no doubt that it will 
be in a position to reimburse them within a reasonable period, 
by resorting to the extraordinary measure of levying a tem- 
porary additional tax on those exports which could bear such 



— 91 — 

a tax without injury to the national industry. The proceeds of 
this additional tax would be prorated among the banks de- 
spoiled, and would cease to be levied on the exports the very 
minute that the purpose for which it was created had been 
satisfied. 

Independently of the process outlined above, subscriptions 
to the capital stock of the Bank of Issue would be opened to 
independent financial institutions and to the public in general. 
We do not delude ourselves with the notion that this procedure 
would result in the collection of one hundred to two hundred 
million pesos frequently heard in this connection and which in 
our judgment would be wholly unnecessary. The bank might 
begin to operate with modest resources, to be steadily increased 
as the country enters more and more along the path of de- 
velopment and prosperity. 

We have said that the single Bank of Issue will fulfill two 
radically distinct functions: A strictly banking function charac- 
terized by discounts, exchanges and deposits, and the function 
of the issuance of bills. The latter will be exclusively under the 
control of the government; accordingly the exchange and dis- 
count department of the bank, although independently adminis- 
tered by the officers of the Bank, should be subordinated to the 
rulings of the government in all matters relating to issue. 

Both through the form we have outlined for the collection 
of the capital stock of the Bank, as well as because of the inter- 
vention of the government in its function as a bank of issue, the 
Bank would be eminently a national institution. Furthermore 
on its board of directors there should be a majority of Mexican 
citizens. In this connection, we believe that the president and 
manager of the Bank should always be Mexican citizens, and 
that the number of foreigners on the board of directors should 
never exceed one-third of the total number of members. 

Among the services to be rendered by the Bank should be 
the concentration of the funds of the Federal Government col- 
lected throughout the country and their disbursement under in- 
structions of the Treasury Department. Among other advantages, 
this arrangement would provide for the facilitation of the circula- 
tion of the bills of the Bank of Issue, which will, however, be 
redeemable at sight. It will furthermore permit the creation of 
other institutions of credit, without the need of using the metallic 
reserve of the Bank, thereby leaving a balance available for 
other purposes. 



92 — 



The resources of the Bank should not remain idle. In 
view ot the need of capital in Mexico, it is reasonable to assuine 
that the best investment of funds can be made in the Republic 
itself. And yet, if we are not to fall into costly error, only after 
long experience can any substantial amounts be taken from the 
Bank and used in promoting institutions of agricultural credit, 
whether of mortgage or of promotion. 

In condemning any resort to foreign loans to obtain the 
capital of the Bank, we have borne in mind the immediate effect 
which such an operation would have upon exchange. The system 
we advocate, on the other hand, would stimulate the increase 
of rates on foreign exchange. This situation, however, would 
not, as we believe, be prejudicial to the progress of Mexico, but 
would rather stimulate production, besides having other incidents 
which would react favorably on the economic situation. 

No program of national reconstruction would be complete 
which omitted the important subject of taxation. And yet dif- 
ferent circumstances conspire to prevent our making more than 
a general reference to the topic. In the first place, we lack the 
essential premise, namely, reliable statistics covering a suffi- 
ciently long period. The economic phenomena in Mexico have 
undergone various changes due to domestic revolution and dis- 
order and to the complex effects of the European War. In the 
circumstances, any attempt to counsel a specific line of action 
would lead to error. 

It is, of course, evident that the Carranza administration 
has imposed upon the tax payers burdensome taxes, some of 
which, — such as the 50 per cent quota of the so-called federal 
tax, — should be radically modified, and that there are other 
taxes which, while ante-dating the Carranza government, should 
definitely disappear, either because they are irritating and in- 
quisitorial in character, or because they are in conflict with all 
economic principles. Certain taxes are the out-growth of the 
vicious practice of the federal government in restricting the 
economic activities of the various states, by levying special taxes 
thereon, so soon as they attained any importance — a system, 
not only in conflict with our federal pact, but unfair and un- 
economic. An analysis of our taxation from the standpoint of 
accepted legal classifications might readily be made; but such 
2 survey would not lead to any practical result, because we are 
unable to make specific recommendations. 

In a general way, we may say that if the reconstruction of 



— 93 — 

Mexico rests fundamentally on the solution of her economic 
problems, or, in other words, if Mexico needs, above all things 
else, to mobilize all her sources of credit so as to intensify 
agricultural production, then a sound taxation system should 
have this supreme purpose always in mind. 

Our conclusions on the subject treated in this chapter 
follow: 

The solution of the economic and financial problem of Mexico 
lies in the settlement of its pecuniary responsibilities and in the 
stimulation of its sources of wealth, with a view to increase produc- 
tion, especially agricultural. 

However painful, we must recognize that the country is bank- 
rupt, and that the resources at its command, now and for a certain 
number of years to come, are inadequate to warrant the immediate 
payment of her obUgations, after meeting the necessary expenditures 
for the administration of public affairs. 

It seems to us evident that the government should not contract 
new debts in carrying out its part in reconstruction. We need, beyond 
all question, foreign capital; and we should, therefore, give it every 
encouragement to invest in Mexican enterprises; but such capital 
should come to us through the spontaneous action of private initia- 
tive, with full legal safeguards. 

Accordingly, we condemn the economic policy of the govern- 
ments emanating from the Querétaro constitution — a code conceived 
in a spirit of hostility to foreign capital and to everything foreign. 
The first step is the repeal of laws which oppress capital, and the 
confiding of the administration of public affairs to upright men, 
capable of understanding the needs of the people and the action 
of economic laws. Once this has been assured, the government may, 
by means of the national resources, do its share in the task of re- 
construction, and may, in no very remote future, comply with all 
its outstanding obligations. We go still farther; it is a duty of 
every really patriotic government to assure, by means of a policy 
such as we suggest, the economic independence of Mexico and thus 
pave the way for its advancement. 

To this end, it will, furthermore, be necessary to obtain from 
our creditors a reasonable extension, not the compulsory and ir- 
regulated extension we have been enjoying, but one expressly agreed 
upon by the parties. By virtue of this arrangement, the govern- 
ment should immediately begin paying a part of the interest on 
all bonded indebtedness, the balance of the interest being left as 
deferred interest. The aliquot part of the interest should be in- 
creased year by year, or on longer terms if agreed upon, until the 
service can be wholly resumed, or until the conditions of the country 
and of the money markets of the worid allow the making of special 
arrangements on the various classes of bonded debt or a general 
settlement covering all kinds of indebtedness. 

So, too, we condemn as antipatriotic and anti-economic every 



94 



effort directed to secure a new loan lu liquidate outstanding debts. 
A new loan would entail greater burdens than those we now can 
bear, and would mean large commissions to bankers or agents, a 
heavy discount on the bonds, and a high interest rate. Again, since 
those making the loan would not accept the ordinary guarantees, 
which have proved to be unavailing in our state of anarchy, we 
should be forced to give other guarantees which would be derogatory 
to our national dignity. With our obligations increased, we should 
soon be in the position of not being able to fulfill them, and be 
confronted with the danger of having meted out to us the same 
fate as other insolvent nations of the American continent have 
already met. 

Legitimate claims growing out of our condition of disorder 
should be paid in special bond issues; it is reasonable to hope 
that the foreign governments interested in such claims will accept 
this method of payment. The bonds would be redeemable at long 
terms, and bear no interest until after an accepted period. 

The responsibilities of the government to the creditors of the 
National Railways should be the subject of a special settlement, as 
outlined in our chapter on railroads. In no circumstances whatever, 
should a new loan for the rehabilitation of the railroads be made, 
since the most advantageous arrangement for the country in this 
respect is an effort on the part of the government to be released 
from the burdens it has assumed in regard to the National Lines. 
A fresh loan would merely add to these burdens. 

We believe that the government should be an important factor 
in fostering national production. Among other functions, it must 
play one important role, namely, to expand and disseminate credit 
by means of a banking system different from that which existed in 
Mexico prior to the Carranza revolution. The right of issue should 
be confined to a single institution, in whose strictly banking func- 
tions the government should have no intervention, although the issue 
of notes would be under the direct control of the government. 
This bank should not, as a general rule, deal directly with the 
public, but operate through private banks to be established with 
entire freedom, although remaining subject to the supervision and 
publicity required by law for the protection of the public's interest. 
The Bank of Issue would distribute its credit throughout the Re- 
public, through the process of rediscount, and by the concentration 
and distribution of public moneys collected in different parts of 
the country. The president, manager, and not less than two-thirds 
of its directors should be Mexican citizens. 

We believe that the capital stock of the Bank should not be 
obtained through a foreign loan, since the contraction of such a 
loan would be both anti-patriotic and anti-economic, and would, 
moreover, rob the institution of its national character. It is our 
judgment that the best means of initiating the subscription to the 
capital stock of the Bank would be to invite the former banks to 
subscribe, in cash, a part of this capital stock. The government 
should, sooner or later, enter into arrangements with these banks; 



— 95 — 

and since the establishment of the single Bank of Issue would de- 
finitely deprive them of the character of banks of issue, it is an 
act of justice to offer *^hem the opportunity to become interested 
in the new institution. 

The government should reimburse the former banks of issue 
the amounts forcibly taken from them by the Carranza administra- 
tion. To this end, we propose that, until such time as the conditions 
of the public treasury allow a better arrangement, there be used for 
this reimbursement, funds obtained from an additional tax, — transi- 
tory in character, — on certain exports which, because of the high 
prices prevailing abroad, warrant such a surcharge. 

We advocate a general revision of our tax laws, so as to make 
them more equitable and more in consonance with economic principles. 
A complete revision is particularly urgent in import and export 
duties, since the rates now in force follow no system, and are based 
either on a wholly opportunist viewpoint, or on the imperative need 
of funds, or, again, on the immoral purpose of favoring certain interests 
or persons. No bill embodying changes in tariff rates should be in- 
troduced by the Executive into Congress unless the proposed measure 
is made public well in advance, so that all who beheve their interests 
affected may be heard on the subject. Futhermore, the Treasury De- 
partment should call special meetings of representatives of the different 
organizations or lines of business more directly interested in the bill, so 
that a frank discussion between themselves, and the representatives 
of the government, may be had as to the advantages and disad- 
vantages of the changes proposed. 

We denounce the system of the grant of extraordinary powers 
to the Executive in the Department of Finance, as both contrary 
to the constitution and incompatible with the essence of democratic 
government, and as a fertile pretext for immoral and scandalous 
speculation. During the Carranza administration, the Executive 
continually legislated in tax matters, — no less than in other matters 
not pertaining to the Department of Finance, — even when Congress 
was in session; and this situation, inconceivable in a constitutional 
regime and in circumstances of orderly government and political 
liberty, continues under the present administration. Many state 
governors are, in turn, invested with similar powers. We protest 
against this form of tyranny which permits the Executive Power 
to dispose of the property of citizens, and to disturb by a mere 
whim, the economic regime of the Republic. Such a practice con- 
stitutes the most humiliating abdication of its inherent powers by 
Congress. The national legislature thus not only violates the constitu- 
tion in granting such extraordinary powers, but is false to the faith 
which the people have reposed in it as the guardian of their interests. 



XV 
THE AGRICULTURAL PROBLEM 

PREJUDICE is certain to be stirred when one hears the ex- 
pression " Mexican Land Problem." It is an expression 
likely to cause inaccurate impressions. The so-called " land 
problem " is only the problem of agriculture in Mexico. In its 
solution are involved the assurance of food supply, that is, the 
life of the people, and the real national wealth. 

We indicated in the preamble of this essay that the mining 
industry, to which Mexico owes its reputation of being one of 
the richest countries in the world, does not represent our true 
wealth. Mexico does not enjoy, except indirectly, the proceeds 
from this industry. The product emigrates from the country 
almost entirely; accordingly, the profits from the industry are 
not distributed in the country except in the rare cases in which 
the mines are operated by Mexican capital. What we say of 
the mining industry is true, in part, of petroleum, the profits 
from which go to a large extent abroad, after the royalties 
generally reserved by Mexican landowners are deducted. 

Deceived by this false concept of our immense mineral wealth 
and believing that the agricultural resources of Mexico are like- 
wise enormous, we infer that the state of misery in which the 
great majority of our people live is due to the unreasonable 
cupidity of the landowning class, who, having cornered the agri- 
cultural resources for their own benefit regard with criminal in- 
difference the abject condition of the great mass of the people. 

The truth is that Mexico is today a poor country, from an 
agricultural point of view, and that the alleged land monopoly of 
the land-owning class is a most painful evidence of poverty. 
The reasons for this state of things are somewhat complex; and 
we now proceed to examine them. 

It is common knowledge that the United States leads all 
other countries in mineral wealth. Yet, if we compare the mining 
output of the United States with its agricultural production, we 
shall see an enormous difference in favor of the latter, 2,300,- 
000,000 (dollars) and 10,500,000,000 (dollars), respectively in 
1915. Unfortunately, the absolute lack of statistical data on 



— 98 — 

agriculture in Mexico renders it impossible to compare its agri- 
cultural production with its mineral output; but we can say that, 
compared with the United States, we are in, not only a relative, 
but an absolute condition of inferiority in the matter of our 
agricultural yield, it will be sufficient for us to cite the figures 
compiled by the Director of the Agricultural Bureau of our 
Department of Fomento which show that, while the average 
yield of wheat per hectare in the United States is 1,068 kUn- 
grams and that of corn 1,302 kilograms, the average yield in 
Mexico from the same area of land is 292 and 6'50 kilograms, 
respectively. 

The stupendous yield of its agricultural products furnishes 
the key to the enormous wealth of the United States. While the 
mining industry benefits directly only a small number, agri- 
culture scatters its blessings among a great mass of the popula- 
tion. Did the character of this work permit, we might attempt 
an explanation of many of the surprising phenomena of Amer- 
ican life, and show that they have their origin in the magnitude 
and type of their agricultural output, toward which nature has 
contributed in a measure probably not equalled elsewhere. We 
should likewise explain how the poverty of our agriculture is 
the underlying cause of many peculiarities of Mexican life, be- 
ginning with the high mortality occasioned by gastro-intestinal 
diseases, — due to the scarcity and inferior quality of food, — 
and ending with the political agitations and banditry which make 
men appear at times fierce, at times heroic, who are merely 
human beings crazed by famine or by their desperation to eke 
out a living with less hardships. 

The agricultural problem is, therefore, a humanitarian and 
patriotic problem; a matter of life and death to our masses. It 
is then criminal to convert it into a war cry and to make it a 
rallying-point for political strife. Of all our problems it is that 
which requires the most dispassionate and scientific study, for 
on its wise solution depend the prosperity and progress of the 
great majority of the Mexican people. 

If we were seeking to emphasize how unpatriotic and in- 
human it is to convert a problem of scientific cooperation into 
a pretext for internecine warfare, it would suffice us to call at- 
tention to the fact that mortality and emigration have increasea 
in Mexico as the direct result of a revolution avowedly under- 
taken to benefit the poorer classes dependent on our meagre 
agricultural production. 



— 102 — 

will be a decisive factor in our evolution. The farmer who per- 
sonally cultivates his land becomes closely identified with it, ob- 
tains the whole yields that it is possible to expect by the exercise 
of his knowledge, and the use of his labor. He accordingly 
vigorously defends his land and everything relating to it. Such 
a farmer would be not only an important element in increasing 
agricultural output, but a decisive factor in the maintenance of 
order, a balance wheel offsetting the anarchy that engulfs us. 
The democratization of the land and the democratization of the 
rural classes appear to us indispensable conditions to political 
democracy. 

The problem of the subdivision of land is also a problem of 
colonization, which offers its own peculiar difficulties. To col- 
onize exclusively with nationals would be tantamount to foster- 
ing, on a small scale the formation of small land holdings, be- 
cause there are few farmers available, even though many of 
them may become so after proper training. Unfortunately, this 
aspect of the problem is complicated with the emigration of our 
best fields workers, who are every day leaving in greater numbers 
for the United States in search of safety to their persons, and a 
sure means of livelihood, which their native land has not been 
able to afford them. Those who do emigrate are, of course, the 
most ambitious, the most intelligent, the strongest, those that 
would offer most hope of the transformation of our agricultural 
legime. When our fields suffered the scourge of anarchy which 
the revolution brought in its train, the same phenomenon took 
place as was seen when the paper money drove out the gold 
currency: It was Gresham's law applied to man. 

In order to detain this current of emigration, once order lias 
been restored, the inhabitants of our fields must be afforded the 
opportunity of becoming independent settlers. At the same time, 
however, efforts should be made to establish settlements of mem- 
bers of the Caucasian race who by their contact with the native 
settlers might offer them the advantages of the example of su- 
perior culture. The foreign settler that would most meet our 
needs is the small farmer who is ready to emigrate to countries 
where land is cheaper than in his own country, and not im- 
poverished by the incessant cultivation of years. 

We have now pointed out the chief factors of the problem, 
in so far as they relate to land, capital, and man. We shall now 
allude to another important factor, namely, the law which re- 
gulates the relations among these three factors. 



— 101 — 

situation because of the use of antiquated methods. Those 
however, who are familiar with our farm life, will know that 
there are many farmers who would welcome the use of modern 
farm implements, and modern chemical methods, but who fail 
because of the difficulties inherent in the situation, not the least 
of which are the lack of capital and the refusal of the natives 
to try new methods. 

These circumstances induce the land-owner to subdivide his 
lands, whenever the opportunity offers, thus constituting a power- 
ful factor in favor of subdivision of large landed estates which 
will be carried out when there are no other reasons, not inherent 
in the problem itself, which stand in the way. 

In the last years of the Diaz administration the subdivision 
of lands had been begun under such favorable auspices as to 
offer the hope tiiat it might soon become general. The banks 
furnished the farmers with the necessary credit to the neglect of 
their strictly banking functions, thereby contributing to the sub- 
division of large properties, since they demanded no mortgage 
guaranty for their loans. It is well known that our mortgage 
laws establish the principle of the indivisibility of the guaranty. 
This acts as an obstacle in the subdivision of any mortgaged 
property, since the credit secured by the mortgage affects each 
and everyone of the lots into which the whole estate is divided. 
The movement in favor of the subdivision of property suffered a 
setback when the Treasury Department, in February 1908, ruled 
that banks should confine their operations to discount for a term 
of six months. It was later wholly suspended when the political 
upheaval destroyed every form of credit in the country. 

We endorse the view commonly held as to the advisability 
of subdividing large landed estates, not through antagonism to 
the land-owning classes, — a sentiment which we have shown 
to be unjustified. — but because small landed property in the 
hands of men with adequate financial resources will contribute 
to the transformation of our social life, increasing the staples 
of food and elevating the moral condition of our millions of 
farm hands. 

We do not, of course, advocate the extinction of large landed 
estates that are indispensable for certain crops and for stock 
laising. We likewise do not pass over the arguments often made 
in favor of large holdings because of the constantly increasing 
use of farm machinery; but we realize the exigencies of the pre- 
sent day, and feel that the promotion of small land holdings 



— 100 — 

so that the development of agriculture in Mexico depends to a 
large extent on the construction of railroads, which in turn de- 
mands a large outlay of capital. 

There are regions in the country where all favorable ele- 
ments concur: land, water, sanitation and communication. 
These areas are, however, small, and hence are called upon to 
bear the burden of furnishing food for the whole nation. The 
agricultural output, therefore, is determined by the demand for 
staples. This accounts for the fact that some of these tracts 
are devoted to the cultivation of wheat, despite the ravages of 
various tropical plagues on this cereal; but the demand for this 
crop causes others to be neglected which, while not subject to 
the danger of plagues, are less in demand as not being so neces- 
sary as a staple to the people. The farmer is thus bound down 
by the routine of immemorial practice; and the land daily be- 
comes more and more impoverished. 

Three deductions may be drawn from the foregoing facts: 

First. That in view of the topographical, hydrographic and 
climatological conditions in Mexico, agriculture cannot be ap- 
preciably improved except through the investment of large 
capitals. Any attack, therefore, on capital in Mexico is a direct 
attack upon the interests of the people. 

Secondly. For the same reason, small landed property, de- 
voted to intensive cultivation, has only been possible on a small 
scale, and as a result our agriculture has had to be of the capital- 
istic or large land-owning class, — latifundista, — to use the ex- 
pression made so familiar by the revolution. 

Thirdly. The backwardness of Mexican agriculture is due 
to natural and economic phenomena to a large extent inde- 
pendent of any action on the part of the class owning great 
estates. 

To those who believe that the Mexican land-owner is 
avaricious, and exploits the misery of the majority of the in- 
habitants, it will no doubt be a surprise to learn that the situa- 
tion of the land-owner is such that in the majority of cases, 
when he contracts a debt and can only rely on the produce of 
his farm to liquidate it, he usually dies without paying the debt, 
and his only chance of being released lies in selling the land to 
someone with more capital. This is the condition of the Mexican 
land-owner, as described by the publicists of the 18th century, 
and this it is today. 

It may be argued that the landowner is responsible for his 



99 — 



Before \vc may properly torimilatc soiiiui rccomiiK'iulatioiis 
on a problem ot such ij;ravity as this, vvc must, at least, make a 
passing survey ot its chief factors. 



The Mexican Republic has enormous areas cultivated 
poorly or not at all. This is evident even in districts where the 
land is very fertile but the climate hot and insalubrious, render- 
ing such regions uninhabitable to persons from elsewhere, and 
decisively enervating the character of the inhabitants. These 
lands would be rich if the considerable capital required for their 
sanitation were to be invested in them. 

In other zones, such as the districts of Sonora and Sinaloa, 
which correspond to the western slope of the Sierra Madre, the 
climate is healthy and the land fertile; but. here too, a large in- 
vestment of capital in irrigation projects is necessary before the 
land can be brought under agriculture. 

in large tracts of the central tableland the land is equally 
good and the climate equally favorable; but this land is now 
largely impoverished through prolonged cultivation and the in- 
sufficiency of water. The success of crops in these districts 
depends on the contingency of rain which falls but three or four 
months of the year; while it not uncommonly happens that the 
rains are lacking at the moment most critical in the growth of 
vegetation or else fall in such abundance as to ruin cultivation 
and to sweep away the crops. Furthermore, the altitude causes 
rapid evaporation, thereby increasing the uncertainty of crops. 

There are other extensive tracts in the so-called northern 
tableland that must be classified among the arid or semi-arid 
lands, which can with difficulty be cultivated because of the 
sinall rainfall and the scarcity or complete lack of water for 
irrigation purposes. These obstacles cannot, of course, be re- 
moved without the investment of large sums of money. 

Nor are these the only disadvantages weighing upon our 
national afi^riculture. We have only a very few rivers, navigable 
at all or for any distance. Overland travel is difficult, almost 
all the highways being in a poor state, and many being impas- 
sable except on foot or horseback. Prior to the era of railroad 
building wheat raised in Puebla could not compete in Vera Cruz 
with that imported directly from Boston and New York, because 
of high freight rates. The consumption of farm produce is still 
wholly local in places lacking railroad communication, so much 



— 103 — 

The Mexican legislator has only imperfectly grasped certain 
national needs because of his tendency to perpetuate legal tradi- 
tions, that had their origins in times differing from our own. 
Civil law, substantive and procedural alike, both as regards the 
registration of title as well as the transfer of ownership, is full 
of technicalities, which presuppose a training and resources 
wholly beyond the reach of the great majority of Mexicans. This 
is a reason, cooperating with those natural and economic causes 
we have already described, which renders the creation of small 
landed property difficult, and the condition of small farmers quite 
precarious. 

Other reasons combine to bring about the same result, but 
the necessity of reducing this work obliges us to refer to them 
merely in the conclusions we have formulated. 

We can not, however, fail to present certain considerations 
on the policy initiated by the Carranza government in settling 
the problem we are now considering. The Querétaro constitu- 
tion, in its Article 27, decrees the subdivision of "large landed 
estates", the grant of commons to settlements that lack lands, 
and the restitution to these same settlements of the land of which 
they were despoiled after 1856. It prescribes likewise that the 
inhabitants of towns may enjoy in common lands that may thus 
have been assigned to them, and authorizes the President to re- 
voke all land concessions granted by the government from and 
after the year 1856. It goes still further in its zeal to destroy 
everything that might appear as large holdings: it provides that 
each state may fix the maximum area of land which any indi- 
vidual, or corporation, may own. 

This is not the place to analyze all these constitutional 
provisions, still less certain laws which in the enforcement of 
Article 27 have been issued by certain states, or by the federal 
Congress, including the "Law of Uncultivated Lands" recently 
enacted. We shall confine ourselves to the statement that all 
of them, beginning with the constitution, endorse spoliation and 
undermine the economic structure of the country, without sub- 
stituting another, which may serve as a basis for a new system. 
They are merely destructive measures, incompatible with the 
work of statesmen which must be eminently constructive. 

With the apparent purpose of redeeming the Indian, Article 
27 begins by seeking to restore the communal property regime, 
a system which quite defeats its own alleged intention, for it 
tends to stifle all spirit of individual progress and to hold the 



— 104 — 

native race douii to the same degree of moral, and political, 
inferiority in which it has lived for centuries. The reconstruction 
of the old communal settlements will merely serve to render the 
settlers unfit, to their own detriment and to that of the general 
interest. Under the regime of cüinimina! ownership, the Indian 
is satisfied with a mere pittance, and ekes out a degraded form 
of existence. Deprived of the stimulus and responsibilities of 
individual ownership, he is oblivious of any ct>ncept of really 
human existence and of the spur that makes men compete in the 
strenuous life or make way for the men who, full of ambition, 
advance on behalf of civilization and the most pressing needs 
of mankind. To condemn a considerable part of our population 
to this primitive life, to a communal existence dating back to the 
epoch preceding the arrival of Cortes, at the very doors of one 
of the most ambitious and active peoples who has been steadily 
clearing the arable land of Indian tribes and abolishing com- 
munal ownership; to render useless men and lands when we 
urgently need to utilize both; to turn back, declaring ourselves 
impotent to coordinate the economic factors of production and 
satisfy the needs of the people, — all this shows blind ignorance 
and criminal presumption, the work of reactionaries who, usurp- 
ing the title of "progressive", are guilty of colossal folly when 
they seek to have us believe that the constitution of 1917 is an 
immense step forward. 

Real progress consists in finding and applying the formula 
to redeem the masses from famine and anarchy, for which it is 
necessary to initiate in favor of the field-laborer an evolutionary 
program, which should be the outcome of social action. In ac- 
cordance with the theories prevailing about the middle of the 
XlXth century and which inspired the illustrious members of the 
Constitutional Convention and the reformers of that epoch, every- 
thing should be left to the forces of private initiative. The Indian 
is, in theory, one of so many citizens, invested with full civil 
and political rights. To compel him to abandon his communal 
ownership so as to free him from his primitive condition, and 
supply him, in words at any rate, schools to teach him the rudi- 
ments of education — this was all that it was thought the State 
should do on behalf of our great field-laboring population. 

The experience of three generations has proved that these 
individualistic theories can not be rigidly applied in an environ- 
ment and with a people such as ours. Mexican governments 
need to abandon somewhat the underlying theories of the old 



— IOS — 

laws, and, while respecting the free display of individual action, 
enter upon a path of social activity which shall allow them to be 
a direct factor in solving the land problem. But this action 
should be firmly constructive and progressive, not reactionary or 
destructive as would result from the application of the consti- 
tution of 1917. 

The task calls for continued and sustained effort, and will 
require huge resources and all the technical skill available to 
governments. In the following conclusions we shall set forth 
the general lines of what, in our judgment, should be the pro- 
gram of governmental action in this subject. 

/ / In seeking a solution for the problem of our agriculture, it 
must be considered as a great economic problem in which the life of 
Mexico as an independent nation is bound up; as an act of 
humanity toward our fellow-citizens, and as the most efficacious 
' means of transforming the millions of miserable farm-laborers and 
illiterates into active factors of general progress and citizens of the 
Republic. 

To solve this problem in its manifold manifestations, considerable 
capital is necessary. Consequently, any policy inimical to the invest- 
ment of capital to be used in agriculture and to activities connected 
with it, violates the most sacred interests of the people. We do not 
mean by this that agriculture should be capitalistic; it already is in 
the social-economic sense, and its inability to satisfy the most crying 
needs of the lieople is proof of the importance of popularizing it; 
but in the face of the exigencies of our environment, this transforma- 
tion can only be effected by the investment of new capital. Accord- 
ingly, we condemn the precepts contained in the constitution of 1917 
on this subject, which are inspired in a spirit of hostility to capital, 
and, at the same time, eminently reactionary, since they advocate a 
return to the system of property existing prior to the Spanish con- 
quest and which prevailed during the colonial epoch. The provisions 
in the constitution on the division of lands are not feasible, and 
would, in any event, bring ruin to our agriculture, destroying what 
already exists and without substituting any thing better. 

It should not be thought that we object to the principle that 
settlements should be given the lands required for their municipal 
needs and natural growth, if fair compensation is made for those so 
taken. What appears to us wholly inadmissible is the creation of 
communal lands, whether by grant of commons or by any other 
procedure, which shall keep the field-laborer under the perpetual 
guardianship of the State, and kill any saving ambition he may ever 
have had to become an independent proprietor. 

In carrying out the double purpose of redeeming our field- 
laborers from their abject condition and of increasing production, 
we must enlarge, as much as possible, the number of small farm 
holdings. Fortunately conditions are favorable to this step, since, 



— 106 — • 

for the reasons indicated in the text of this chapter, a considerable 
number of large land owners will find the best solution of their 
economic troubles in the subdivision of their lands. Possibly a 
majority will find that this is the case. The government should 
encourage this tendency, directly intervening in the work of sub- 
division. In carrying out these ends, the following steps recommend 
themselves to us: 

A. That laws be enacted authorizing individuals or companies 
proposing to subdivide privately-owned lands that are suitable for 
subdivision to issue bonds secured by the lands themselves and by 
the additional guarantee of the Federal Government, provided the 
plan of subdivision complies with the requisites prescribed by law. 
The law should establish the conditions assuring the trustworthiness 
of the enterprise and safeguarding the Treasury from possible losses. 

B. That, on request of the interested parties, the government 
should furnish, free of charge, the technical personnel necessary for 
the subdivision of estates suitable for parcelling and colonization, 
the necessary guarantees that the lots will be distributed among in- 
dependent farmers being given to the government. 

C. That the government shall proceed to subdivide national 
lands suitable to this purpose and to sell the lots on credit and at 
low interest rates, subject to the condition that these lots shall not 
fall into the hands of a single owner. 

The chief obstacle to be surmounted in the division of our 
agriculture is the lack of irrigation. Consequently, we believe that in 
carrying out any program of social action the Federal Government 
should establish and operate works for the control and use of run- 
ning waters. 

In any event the tracts to be benefited by the works indicated 
above should not exceed in area the standard size adopted for small 
holdings, taking into account the nature of the crops suitable to the 
region in question. The Government may, of course, expropriate, 
with compensation, lands to be benefited by irrigation, and sub- 
divide them into tracts not over the prescribed area, so that they 
may be sold on the terms fixed by law. In any event, persons de- 
veloping lands benefited by irrigation works executed by the Gov- 
ernment ought to pay the amounts established in the respective 
schedules for their water supply. 

To cover the cost of the irrigation works to be carried out by 
the Government, the latter could secure the funds necessary for this 
purpose either by the issue of special bonds of an internal debt issue, 
or by contracting with banks in the Republic for the necessary loans 
to be secured by the works themselves. Should the Government 
entrust to private initiative the building of certain irrigation works, 
it must grant this privilege to the party offering the most favorable 
terms under conditions prescribed by the Government itself, to 
which effect it ought to call for bids with proper notice. 

We advocate a revision of the laws governing the use of water so 
that it may be enjoyed by private parties more equitably. We like- 
wise demand a simplification of procedure in securing water fran- 



107 



chises and in confirming rights to the enjoyment of waters, so that 
they may be made accessible to small farmers. The Agencies of the 
department of Fomento should be in charge of experts and should 
render, free of charge, to poor farmers such technical aid as they 
may need in complying with the requisites laid down by the law 
in this regard. 

The credit of the Nation should be pledged in the establishment 
of farm loan banks designed to promote the interests of small land 
owners, either by guaranteeing payment of the capital of their lands 
or by furnishing them with loans at long terms and low rates of 
interest for buildings, machinery and farm implements, irrigation works 
or any other purpose directly connected with the development of the 
agricultural property. No agriculturist ought to be loaned amounts 
in excess of fifty thousand pesos enjoying the guarantee of the State. 

The Federal and State Governments should see that in the lands 
thus subdivided Mexican settlers be established preferentially. We 
advocate, however, the reservation of certain lots for sale to foreign 
settlers of the Caucasian race in every subdivision of land, in view 
of the inñuence which the higher culture of these settlers may have 
on the Mexican settlers. 

The number of experimental agricultural stations should be 
adequately increased where methods of cultivation, stock raising, the 
use of modern farm implements, chemical fertilization, and other facts 
advantageous to the practical farmer could be taught free of charge; 
and equipped with a corps of traveling instructors who shall visit 
the various farms and assist the farmers as above provided. 

The Federal and State Governments should encourage by direct 
and indirect means the building of highways and regional railroads 
which shall facilitate communication between centers of agricultural 
production and centers of consumption. They should likewise pro- 
mote the organization of cooperative farming associations. 

It is our judgment that our civil laws, substantive no less than 
procedural, are inadequate by reason of their excessive technicalities 
in the development of small landed property. Today it is a fact that 
only with difficulty can the ignorant and those lacking the necessary 
funds obtain clear title of ownership to their lands. We cannot in 
ine present document detail remedies for these evils, but the urgency 
of the remedies is so great that no time should be lost in putting 
them into effect. Our laws on property undoubtedly satisfy the 
exigencies of the rich or well-to-do classes, but they are beyond the 
reach of the poor who need the direct protection of the law in any 
program of governmental action. 

But if the laws to which allusion is made, are a handicap to the 
economic development of the majority of the Mexican people, the 
fiscal laws have not been inspired in any more liberal spirit. Trans- 
fers of ownership are generally taxed excessively, and payment of 
taxes is a condition precedent to legal effect of title, even in the case 
of inheritance. This condition is wholly useless from the point of 
view of the fiscal interest, since the Treasury always has the power 
to compel payment of taxes. The laws on land taxation lack any 



IOS 



scientific basis and Ihe assessment of lands is generally excessive, re- 
sulting in the concealment of the real value by the tax payer in his 
effort to evade ruinous rates. As these concealments are easy in 
large land holdings and difficult in the small, the small land owner 
is unfairly taxed in comparison with the large holder. This unjust 
situation calls for a modification of our fiscal laws which shall bring 
about a more equitable distribution of the tax. 

In view of the national need of increasing the number of small 
land owners, every person who has held and developed for three 
years or more a tract of national or public lands not exceeding 300 
hectares, should receive, free of cost, title thereunto. 

In harmony with the same theory, the Government ought not 
to alienate in favor of any person a tract of national or public land 
greater than 300 hectáreas; but this rule should be modified in the 
case of lands which cannot be used except for stockraising or for 
the cultivation of crops requiring inherently a larger extent of land. 
But no person whatever should receive a grant of more than 10,000 
hectares. 

In order to assure these small land settlers against the dangers 
of usury, we recommend that the lavv recognize the "homestead", 
not subject to attachment or liability for debt. 



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